Correlation Between Bonanza Goldfields and Metallis Resources

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

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

Diversification Opportunities for Bonanza Goldfields and Metallis Resources

0.0

Correlation Coefficient

Bonanza Goldfields  Metallis Resources

Pay attention - limited upside

The 3 months correlation between Bonanza and Metallis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bonanza Goldfields and Metallis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallis Resources and Bonanza Goldfields 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 Bonanza Goldfields are associated (or correlated) with Metallis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallis Resources has no effect on the direction of Bonanza Goldfields i.e., Bonanza Goldfields and Metallis Resources go up and down completely randomly.

Pair Corralation between Bonanza Goldfields and Metallis Resources

If you would invest (100.00) in Bonanza Goldfields on December 4, 2024 and sell it today you would earn a total of  100.00  from holding Bonanza Goldfields or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bonanza Goldfields  vs.  Metallis Resources

Bonanza Goldfields

Risk-Adjusted Performance

Very Weak

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

Metallis Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metallis Resources 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bonanza Goldfields and Metallis Resources

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

The idea behind Bonanza Goldfields and Metallis Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.