Correlation Between Bonterra Resources and Labrador Gold

Can any of the company-specific risk be diversified away by investing in both Bonterra Resources and Labrador 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 Labrador 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 Labrador Gold Corp, you can compare the effects of market volatilities on Bonterra Resources and Labrador 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 Labrador Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bonterra Resources and Labrador Gold.

Diversification Opportunities for Bonterra Resources and Labrador Gold

0.55

Correlation Coefficient

Bonterra Resources  Labrador Gold

Very weak diversification

The 3 months correlation between Bonterra and Labrador is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bonterra Resources and Labrador Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Gold Corp 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 Labrador Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Gold Corp has no effect on the direction of Bonterra Resources i.e., Bonterra Resources and Labrador Gold go up and down completely randomly.

Pair Corralation between Bonterra Resources and Labrador Gold

Assuming the 90 days horizon Bonterra Resources is expected to generate 0.62 times more return on investment than Labrador Gold. However, Bonterra Resources is 1.61 times less risky than Labrador Gold. It trades about -0.01 of its potential returns per unit of risk. Labrador Gold Corp is currently generating about -0.03 per unit of risk. If you would invest  20.00  in Bonterra Resources on August 31, 2024 and sell it today you would lose (2.00) from holding Bonterra Resources or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Bonterra Resources  vs.  Labrador Gold Corp

Bonterra Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Labrador Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bonterra Resources and Labrador Gold

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

The idea behind Bonterra Resources and Labrador 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.