Correlation Between Cerrado Gold and MTY Food

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

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

Diversification Opportunities for Cerrado Gold and MTY Food

-0.2

Correlation Coefficient

Cerrado Gold  MTY Food

Good diversification

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

Pair Corralation between Cerrado Gold and MTY Food

Assuming the 90 days trading horizon Cerrado Gold Corp is expected to generate 2.27 times more return on investment than MTY Food. However, Cerrado Gold is 2.27 times more volatile than MTY Food Group. It trades about 0.13 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.06 per unit of risk. If you would invest  34.00  in Cerrado Gold Corp on December 20, 2024 and sell it today you would earn a total of  15.00  from holding Cerrado Gold Corp or generate 44.12% return on investment over 90 days.

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

Cerrado Gold Corp  vs.  MTY Food Group

Cerrado Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cerrado Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cerrado Gold showed solid returns over the last few months and may actually be approaching a breakup point.

MTY Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTY Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cerrado Gold and MTY Food

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

The idea behind Cerrado Gold Corp and MTY Food Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.