Correlation Between Black Iron and Fremont Gold

Can any of the company-specific risk be diversified away by investing in both Black Iron and Fremont Gold 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 Black Iron and Fremont Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Iron and Fremont Gold, you can compare the effects of market volatilities on Black Iron and Fremont Gold 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 Black Iron with a short position of Fremont Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Iron and Fremont Gold.

Diversification Opportunities for Black Iron and Fremont Gold

-0.39

Correlation Coefficient

Black Iron  Fremont Gold

Very good diversification

The 3 months correlation between Black and Fremont is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Black Iron and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold and Black Iron 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 Black Iron are associated (or correlated) with Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Black Iron i.e., Black Iron and Fremont Gold go up and down completely randomly.

Pair Corralation between Black Iron and Fremont Gold

Assuming the 90 days trading horizon Black Iron is expected to generate 0.81 times more return on investment than Fremont Gold. However, Black Iron is 1.23 times less risky than Fremont Gold. It trades about 0.29 of its potential returns per unit of risk. Fremont Gold is currently generating about 0.19 per unit of risk. If you would invest  11.00  in Black Iron on October 26, 2024 and sell it today you would earn a total of  7.00  from holding Black Iron or generate 63.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.11%
Values	Daily Returns

Black Iron  vs.  Fremont Gold

Black Iron

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Black Iron are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Black Iron displayed solid returns over the last few months and may actually be approaching a breakup point.

Fremont Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fremont Gold is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Black Iron and Fremont Gold

The main advantage of trading using opposite Black Iron and Fremont Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Iron position performs unexpectedly, Fremont Gold 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 Fremont Gold will offset losses from the drop in Fremont Gold's long position.

The idea behind Black Iron and Fremont Gold 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.