Correlation Between Bushveld Minerals and Core Assets

Can any of the company-specific risk be diversified away by investing in both Bushveld Minerals and Core Assets 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 Bushveld Minerals and Core Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bushveld Minerals Limited and Core Assets Corp, you can compare the effects of market volatilities on Bushveld Minerals and Core Assets 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 Bushveld Minerals with a short position of Core Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bushveld Minerals and Core Assets.

Diversification Opportunities for Bushveld Minerals and Core Assets

0.67

Correlation Coefficient

Bushveld Minerals  Core Assets

Poor diversification

The 3 months correlation between Bushveld and Core is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bushveld Minerals Limited and Core Assets Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Assets Corp and Bushveld Minerals 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 Bushveld Minerals Limited are associated (or correlated) with Core Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Assets Corp has no effect on the direction of Bushveld Minerals i.e., Bushveld Minerals and Core Assets go up and down completely randomly.

Pair Corralation between Bushveld Minerals and Core Assets

Assuming the 90 days horizon Bushveld Minerals Limited is expected to generate 23.42 times more return on investment than Core Assets. However, Bushveld Minerals is 23.42 times more volatile than Core Assets Corp. It trades about 0.22 of its potential returns per unit of risk. Core Assets Corp is currently generating about 0.06 per unit of risk. If you would invest  0.04  in Bushveld Minerals Limited on December 29, 2024 and sell it today you would earn a total of  0.36  from holding Bushveld Minerals Limited or generate 900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Bushveld Minerals Limited  vs.  Core Assets Corp

Bushveld Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bushveld Minerals Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bushveld Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Core Assets Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Assets Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Core Assets reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bushveld Minerals and Core Assets

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

The idea behind Bushveld Minerals Limited and Core Assets 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.