Correlation Between Cerrado Gold and Moneta Gold

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

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

Diversification Opportunities for Cerrado Gold and Moneta Gold

0.0

Correlation Coefficient

Cerrado Gold  Moneta Gold

Pay attention - limited upside

The 3 months correlation between Cerrado and Moneta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Moneta Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moneta Gold 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 are associated (or correlated) with Moneta Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moneta Gold has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Moneta Gold go up and down completely randomly.

Pair Corralation between Cerrado Gold and Moneta Gold

If you would invest  23.00  in Cerrado Gold on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Cerrado Gold or generate 43.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cerrado Gold  vs.  Moneta Gold

Cerrado Gold

Risk-Adjusted Performance

Good

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

Moneta Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moneta Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Moneta 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 Cerrado Gold and Moneta Gold

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

The idea behind Cerrado Gold and Moneta Gold 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.