Correlation Between Cerrado Gold and Mundoro Capital

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

Diversification Opportunities for Cerrado Gold and Mundoro Capital

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Cerrado and Mundoro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold Corp and Mundoro Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundoro Capital 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 Mundoro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundoro Capital has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Mundoro Capital go up and down completely randomly.

Pair Corralation between Cerrado Gold and Mundoro Capital

Assuming the 90 days trading horizon Cerrado Gold is expected to generate 1.14 times less return on investment than Mundoro Capital. In addition to that, Cerrado Gold is 1.73 times more volatile than Mundoro Capital. It trades about 0.01 of its total potential returns per unit of risk. Mundoro Capital is currently generating about 0.02 per unit of volatility. If you would invest  17.00  in Mundoro Capital on October 9, 2024 and sell it today you would earn a total of  1.00  from holding Mundoro Capital or generate 5.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cerrado Gold Corp  vs.  Mundoro Capital

 Performance 
       Timeline  
Cerrado Gold Corp 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Cerrado Gold Corp are ranked lower than 15 (%) 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.
Mundoro Capital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mundoro Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cerrado Gold and Mundoro Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cerrado Gold and Mundoro Capital

The main advantage of trading using opposite Cerrado Gold and Mundoro Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Mundoro Capital 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 Mundoro Capital will offset losses from the drop in Mundoro Capital's long position.
The idea behind Cerrado Gold Corp and Mundoro Capital 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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