Correlation Between Neometals and Gold Bullion

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

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

Diversification Opportunities for Neometals and Gold Bullion

-0.47

Correlation Coefficient

Neometals  Gold Bullion

Very good diversification

The 3 months correlation between Neometals and Gold is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Gold Bullion Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion Securities and Neometals 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 Neometals are associated (or correlated) with Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion Securities has no effect on the direction of Neometals i.e., Neometals and Gold Bullion go up and down completely randomly.

Pair Corralation between Neometals and Gold Bullion

Assuming the 90 days trading horizon Neometals is expected to under-perform the Gold Bullion. In addition to that, Neometals is 7.47 times more volatile than Gold Bullion Securities. It trades about -0.04 of its total potential returns per unit of risk. Gold Bullion Securities is currently generating about 0.18 per unit of volatility. If you would invest  1,903,700  in Gold Bullion Securities on November 19, 2024 and sell it today you would earn a total of  206,800  from holding Gold Bullion Securities or generate 10.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	83.87%
Values	Daily Returns

Neometals  vs.  Gold Bullion Securities

Neometals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Gold Bullion Securities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Neometals and Gold Bullion

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

The idea behind Neometals and Gold Bullion Securities 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.