Correlation Between Bonanza Goldfields and Mundoro Capital

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

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

Diversification Opportunities for Bonanza Goldfields and Mundoro Capital

0.42

Correlation Coefficient

Bonanza Goldfields  Mundoro Capital

Very weak diversification

The 3 months correlation between Bonanza and Mundoro is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bonanza Goldfields and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital 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 Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of Bonanza Goldfields i.e., Bonanza Goldfields and Mundoro Capital go up and down completely randomly.

Pair Corralation between Bonanza Goldfields and Mundoro Capital

If you would invest  0.10  in Bonanza Goldfields on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Bonanza Goldfields or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Bonanza Goldfields  vs.  Mundoro Capital

Bonanza Goldfields

Risk-Adjusted Performance

0 of 100

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.

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bonanza Goldfields and Mundoro Capital

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

The idea behind Bonanza Goldfields and Mundoro Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.