Correlation Between New Destiny and Bravada Gold

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

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

Diversification Opportunities for New Destiny and Bravada Gold

0.81

Correlation Coefficient

New Destiny  Bravada Gold

Very poor diversification

The 3 months correlation between New and Bravada is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding New Destiny Mining and Bravada Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bravada Gold and New Destiny 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 New Destiny Mining are associated (or correlated) with Bravada Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bravada Gold has no effect on the direction of New Destiny i.e., New Destiny and Bravada Gold go up and down completely randomly.

Pair Corralation between New Destiny and Bravada Gold

Assuming the 90 days horizon New Destiny Mining is expected to under-perform the Bravada Gold. But the stock apears to be less risky and, when comparing its historical volatility, New Destiny Mining is 2.95 times less risky than Bravada Gold. The stock trades about -0.21 of its potential returns per unit of risk. The Bravada Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Bravada Gold on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Bravada Gold or generate 0.0% return on investment over 90 days.

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

New Destiny Mining  vs.  Bravada Gold

New Destiny Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bravada Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bravada Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, Bravada Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with New Destiny and Bravada Gold

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

The idea behind New Destiny Mining and Bravada 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.