Correlation Between DIRTT Environmental and Batero Gold

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

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

Diversification Opportunities for DIRTT Environmental and Batero Gold

-0.7

Correlation Coefficient

DIRTT Environmental  Batero Gold

Excellent diversification

The 3 months correlation between DIRTT and Batero is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding DIRTT Environmental Solutions and Batero Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batero Gold Corp and DIRTT Environmental 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 DIRTT Environmental Solutions are associated (or correlated) with Batero Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batero Gold Corp has no effect on the direction of DIRTT Environmental i.e., DIRTT Environmental and Batero Gold go up and down completely randomly.

Pair Corralation between DIRTT Environmental and Batero Gold

Assuming the 90 days trading horizon DIRTT Environmental Solutions is expected to generate 0.36 times more return on investment than Batero Gold. However, DIRTT Environmental Solutions is 2.76 times less risky than Batero Gold. It trades about 0.39 of its potential returns per unit of risk. Batero Gold Corp is currently generating about -0.08 per unit of risk. If you would invest  95.00  in DIRTT Environmental Solutions on October 22, 2024 and sell it today you would earn a total of  31.00  from holding DIRTT Environmental Solutions or generate 32.63% return on investment over 90 days.

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

DIRTT Environmental Solutions  vs.  Batero Gold Corp

DIRTT Environmental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIRTT Environmental Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIRTT Environmental displayed solid returns over the last few months and may actually be approaching a breakup point.

Batero Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batero Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with DIRTT Environmental and Batero Gold

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

The idea behind DIRTT Environmental Solutions and Batero Gold Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.