Correlation Between Champion Bear and Baroyeca Gold

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

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

Diversification Opportunities for Champion Bear and Baroyeca Gold

-0.24

Correlation Coefficient

Champion Bear  Baroyeca Gold

Very good diversification

The 3 months correlation between Champion and Baroyeca is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and Baroyeca Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baroyeca Gold Silver and Champion Bear 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 Champion Bear Resources are associated (or correlated) with Baroyeca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baroyeca Gold Silver has no effect on the direction of Champion Bear i.e., Champion Bear and Baroyeca Gold go up and down completely randomly.

Pair Corralation between Champion Bear and Baroyeca Gold

Assuming the 90 days horizon Champion Bear Resources is expected to generate 2.64 times more return on investment than Baroyeca Gold. However, Champion Bear is 2.64 times more volatile than Baroyeca Gold Silver. It trades about 0.11 of its potential returns per unit of risk. Baroyeca Gold Silver is currently generating about 0.0 per unit of risk. If you would invest  2.00  in Champion Bear Resources on August 31, 2024 and sell it today you would earn a total of  2.00  from holding Champion Bear Resources or generate 100.0% return on investment over 90 days.

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

Champion Bear Resources  vs.  Baroyeca Gold Silver

Champion Bear Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Champion Bear reported solid returns over the last few months and may actually be approaching a breakup point.

Baroyeca Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Champion Bear and Baroyeca Gold

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

The idea behind Champion Bear Resources and Baroyeca Gold Silver 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.