Correlation Between British Amer and Prodigy Gold

Can any of the company-specific risk be diversified away by investing in both British Amer and Prodigy Gold 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 British Amer and Prodigy Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bailador Technology Invest and Prodigy Gold NL, you can compare the effects of market volatilities on British Amer and Prodigy Gold 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 British Amer with a short position of Prodigy Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Prodigy Gold.

Diversification Opportunities for British Amer and Prodigy Gold

0.2

Correlation Coefficient

British Amer  Prodigy Gold

Modest diversification

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

Pair Corralation between British Amer and Prodigy Gold

Assuming the 90 days trading horizon Bailador Technology Invest is expected to under-perform the Prodigy Gold. But the stock apears to be less risky and, when comparing its historical volatility, Bailador Technology Invest is 14.91 times less risky than Prodigy Gold. The stock trades about 0.0 of its potential returns per unit of risk. The Prodigy Gold NL is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Prodigy Gold NL on October 24, 2024 and sell it today you would lose (0.10) from holding Prodigy Gold NL or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bailador Technology Invest  vs.  Prodigy Gold NL

Bailador Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bailador Technology Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, British Amer is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Prodigy Gold NL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prodigy Gold NL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Prodigy Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with British Amer and Prodigy Gold

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

The idea behind Bailador Technology Invest and Prodigy Gold NL 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.