Correlation Between Cabral Gold and Bluestone Resources

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

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

Diversification Opportunities for Cabral Gold and Bluestone Resources

-0.5

Correlation Coefficient

Cabral Gold  Bluestone Resources

Very good diversification

The 3 months correlation between Cabral and Bluestone is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cabral Gold and Bluestone Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluestone Resources and Cabral Gold 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 Cabral Gold are associated (or correlated) with Bluestone Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluestone Resources has no effect on the direction of Cabral Gold i.e., Cabral Gold and Bluestone Resources go up and down completely randomly.

Pair Corralation between Cabral Gold and Bluestone Resources

Assuming the 90 days horizon Cabral Gold is expected to generate 3.44 times more return on investment than Bluestone Resources. However, Cabral Gold is 3.44 times more volatile than Bluestone Resources. It trades about 0.16 of its potential returns per unit of risk. Bluestone Resources is currently generating about 0.01 per unit of risk. If you would invest  15.00  in Cabral Gold on December 30, 2024 and sell it today you would earn a total of  11.00  from holding Cabral Gold or generate 73.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	17.74%
Values	Daily Returns

Cabral Gold  vs.  Bluestone Resources

Cabral Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cabral Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cabral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Bluestone Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bluestone Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bluestone Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cabral Gold and Bluestone Resources

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

The idea behind Cabral Gold and Bluestone 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.