Correlation Between Bonterra Resources and Gander Gold

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

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

Diversification Opportunities for Bonterra Resources and Gander Gold

0.37

Correlation Coefficient

Bonterra Resources  Gander Gold

Weak diversification

The 3 months correlation between Bonterra and Gander is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bonterra Resources and Gander Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gander Gold and Bonterra Resources 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 Bonterra Resources are associated (or correlated) with Gander Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gander Gold has no effect on the direction of Bonterra Resources i.e., Bonterra Resources and Gander Gold go up and down completely randomly.

Pair Corralation between Bonterra Resources and Gander Gold

Assuming the 90 days horizon Bonterra Resources is expected to generate 2.16 times less return on investment than Gander Gold. But when comparing it to its historical volatility, Bonterra Resources is 2.81 times less risky than Gander Gold. It trades about 0.05 of its potential returns per unit of risk. Gander Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Gander Gold on December 30, 2024 and sell it today you would lose (2.50) from holding Gander Gold or give up 22.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Bonterra Resources  vs.  Gander Gold

Bonterra Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bonterra Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bonterra Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Gander Gold

Risk-Adjusted Performance

Weak

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

Pair Trading with Bonterra Resources and Gander Gold

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

The idea behind Bonterra Resources and Gander 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.