Correlation Between Blue Lagoon and Cassiar Gold

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

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

Diversification Opportunities for Blue Lagoon and Cassiar Gold

-0.45

Correlation Coefficient

Blue Lagoon  Cassiar Gold

Very good diversification

The 3 months correlation between Blue and Cassiar is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Blue Lagoon Resources and Cassiar Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cassiar Gold Corp and Blue Lagoon 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 Blue Lagoon Resources are associated (or correlated) with Cassiar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassiar Gold Corp has no effect on the direction of Blue Lagoon i.e., Blue Lagoon and Cassiar Gold go up and down completely randomly.

Pair Corralation between Blue Lagoon and Cassiar Gold

Assuming the 90 days horizon Blue Lagoon Resources is expected to under-perform the Cassiar Gold. In addition to that, Blue Lagoon is 1.8 times more volatile than Cassiar Gold Corp. It trades about -0.15 of its total potential returns per unit of risk. Cassiar Gold Corp is currently generating about -0.07 per unit of volatility. If you would invest  15.00  in Cassiar Gold Corp on October 7, 2024 and sell it today you would lose (1.00) from holding Cassiar Gold Corp or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Blue Lagoon Resources  vs.  Cassiar Gold Corp

Blue Lagoon Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Lagoon Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Lagoon reported solid returns over the last few months and may actually be approaching a breakup point.

Cassiar Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cassiar Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Blue Lagoon and Cassiar Gold

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

The idea behind Blue Lagoon Resources and Cassiar Gold Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.