Correlation Between Cabral Gold and Cartier Resources

Can any of the company-specific risk be diversified away by investing in both Cabral Gold and Cartier 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 Cartier 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 Cartier Resources, you can compare the effects of market volatilities on Cabral Gold and Cartier 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 Cartier Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabral Gold and Cartier Resources.

Diversification Opportunities for Cabral Gold and Cartier Resources

-0.16

Correlation Coefficient

Cabral Gold  Cartier Resources

Good diversification

The 3 months correlation between Cabral and Cartier is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cabral Gold and Cartier Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier 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 Cartier Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Resources has no effect on the direction of Cabral Gold i.e., Cabral Gold and Cartier Resources go up and down completely randomly.

Pair Corralation between Cabral Gold and Cartier Resources

Assuming the 90 days horizon Cabral Gold is expected to under-perform the Cartier Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cabral Gold is 1.39 times less risky than Cartier Resources. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Cartier Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Cartier Resources on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Cartier Resources or generate 75.0% return on investment over 90 days.

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

Cabral Gold  vs.  Cartier Resources

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cartier Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Cartier Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cabral Gold and Cartier Resources

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

The idea behind Cabral Gold and Cartier 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.