Correlation Between Norsemont Mining and Bellevue Gold

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

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

Diversification Opportunities for Norsemont Mining and Bellevue Gold

0.66

Correlation Coefficient

Norsemont Mining  Bellevue Gold

Poor diversification

The 3 months correlation between Norsemont and Bellevue is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Norsemont Mining and Bellevue Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Gold Limited and Norsemont Mining 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 Norsemont Mining are associated (or correlated) with Bellevue Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Gold Limited has no effect on the direction of Norsemont Mining i.e., Norsemont Mining and Bellevue Gold go up and down completely randomly.

Pair Corralation between Norsemont Mining and Bellevue Gold

Assuming the 90 days horizon Norsemont Mining is expected to under-perform the Bellevue Gold. In addition to that, Norsemont Mining is 2.1 times more volatile than Bellevue Gold Limited. It trades about -0.09 of its total potential returns per unit of risk. Bellevue Gold Limited is currently generating about 0.03 per unit of volatility. If you would invest  80.00  in Bellevue Gold Limited on November 20, 2024 and sell it today you would earn a total of  2.00  from holding Bellevue Gold Limited or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Norsemont Mining  vs.  Bellevue Gold Limited

Norsemont Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Norsemont Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bellevue Gold Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Gold Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Bellevue Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Norsemont Mining and Bellevue Gold

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

The idea behind Norsemont Mining and Bellevue Gold Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.