Correlation Between Goliath Resources and BCM Resources

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

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

Diversification Opportunities for Goliath Resources and BCM Resources

-0.05

Correlation Coefficient

Goliath Resources  BCM Resources

Good diversification

The 3 months correlation between Goliath and BCM is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Goliath Resources and BCM Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources Corp and Goliath Resources 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 Goliath Resources are associated (or correlated) with BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources Corp has no effect on the direction of Goliath Resources i.e., Goliath Resources and BCM Resources go up and down completely randomly.

Pair Corralation between Goliath Resources and BCM Resources

Assuming the 90 days horizon Goliath Resources is expected to generate 1.12 times less return on investment than BCM Resources. But when comparing it to its historical volatility, Goliath Resources is 1.32 times less risky than BCM Resources. It trades about 0.25 of its potential returns per unit of risk. BCM Resources Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.00  in BCM Resources Corp on October 20, 2024 and sell it today you would earn a total of  1.50  from holding BCM Resources Corp or generate 37.5% return on investment over 90 days.

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

Goliath Resources  vs.  BCM Resources Corp

Goliath Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goliath Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goliath Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BCM Resources Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCM Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, BCM Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goliath Resources and BCM Resources

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

The idea behind Goliath Resources and BCM Resources 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.