Correlation Between Baker Steel and Beowulf Mining

Can any of the company-specific risk be diversified away by investing in both Baker Steel and Beowulf Mining 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 Baker Steel and Beowulf Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Baker Steel and Beowulf Mining

-0.8

Correlation Coefficient

Baker Steel  Beowulf Mining

Pay attention - limited upside

The 3 months correlation between Baker and Beowulf is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Beowulf Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining and Baker Steel 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 Baker Steel Resources are associated (or correlated) with Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining has no effect on the direction of Baker Steel i.e., Baker Steel and Beowulf Mining go up and down completely randomly.

Pair Corralation between Baker Steel and Beowulf Mining

Assuming the 90 days trading horizon Baker Steel Resources is expected to under-perform the Beowulf Mining. But the stock apears to be less risky and, when comparing its historical volatility, Baker Steel Resources is 2.09 times less risky than Beowulf Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Beowulf Mining is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Beowulf Mining on December 22, 2024 and sell it today you would earn a total of  400.00  from holding Beowulf Mining or generate 27.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Baker Steel Resources  vs.  Beowulf Mining

Baker Steel Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baker Steel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Beowulf Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beowulf Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Beowulf Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baker Steel and Beowulf Mining

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

The idea behind Baker Steel Resources and Beowulf Mining 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.