Correlation Between Big Ridge and Group Eleven

Can any of the company-specific risk be diversified away by investing in both Big Ridge and Group Eleven 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 Big Ridge and Group Eleven into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Big Ridge and Group Eleven

-0.2

Correlation Coefficient

Big Ridge  Group Eleven

Good diversification

The 3 months correlation between Big and Group is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Group Eleven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Eleven Resources and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Group Eleven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Eleven Resources has no effect on the direction of Big Ridge i.e., Big Ridge and Group Eleven go up and down completely randomly.

Pair Corralation between Big Ridge and Group Eleven

Assuming the 90 days trading horizon Big Ridge Gold is expected to generate 1.65 times more return on investment than Group Eleven. However, Big Ridge is 1.65 times more volatile than Group Eleven Resources. It trades about 0.09 of its potential returns per unit of risk. Group Eleven Resources is currently generating about -0.02 per unit of risk. If you would invest  6.00  in Big Ridge Gold on September 21, 2024 and sell it today you would earn a total of  3.00  from holding Big Ridge Gold or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.06%
Values	Daily Returns

Big Ridge Gold  vs.  Group Eleven Resources

Big Ridge Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Big Ridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Group Eleven Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Eleven Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Big Ridge and Group Eleven

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

The idea behind Big Ridge Gold and Group Eleven 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.