Correlation Between Bravada Gold and O3 Mining

Can any of the company-specific risk be diversified away by investing in both Bravada Gold and O3 Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bravada Gold and O3 Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bravada Gold and O3 Mining, you can compare the effects of market volatilities on Bravada Gold and O3 Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bravada Gold with a short position of O3 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bravada Gold and O3 Mining.

Diversification Opportunities for Bravada Gold and O3 Mining

0.21

Correlation Coefficient

Bravada Gold  O3 Mining

Modest diversification

The 3 months correlation between Bravada and OIIIF is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bravada Gold and O3 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O3 Mining and Bravada Gold is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bravada Gold are associated (or correlated) with O3 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O3 Mining has no effect on the direction of Bravada Gold i.e., Bravada Gold and O3 Mining go up and down completely randomly.

Pair Corralation between Bravada Gold and O3 Mining

Assuming the 90 days horizon Bravada Gold is expected to generate 14.78 times more return on investment than O3 Mining. However, Bravada Gold is 14.78 times more volatile than O3 Mining. It trades about 0.13 of its potential returns per unit of risk. O3 Mining is currently generating about -0.03 per unit of risk. If you would invest  1.17  in Bravada Gold on December 20, 2024 and sell it today you would earn a total of  0.93  from holding Bravada Gold or generate 79.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Bravada Gold  vs.  O3 Mining

Bravada Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bravada Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bravada Gold reported solid returns over the last few months and may actually be approaching a breakup point.

O3 Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days O3 Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, O3 Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bravada Gold and O3 Mining

The main advantage of trading using opposite Bravada Gold and O3 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bravada Gold position performs unexpectedly, O3 Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in O3 Mining will offset losses from the drop in O3 Mining's long position.

The idea behind Bravada Gold and O3 Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.