Correlation Between Northern Superior and Baru Gold

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

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

Diversification Opportunities for Northern Superior and Baru Gold

-0.74

Correlation Coefficient

Northern Superior  Baru Gold

Pay attention - limited upside

The 3 months correlation between Northern and Baru is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Northern Superior Resources and Baru Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baru Gold Corp and Northern Superior 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 Northern Superior Resources are associated (or correlated) with Baru Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baru Gold Corp has no effect on the direction of Northern Superior i.e., Northern Superior and Baru Gold go up and down completely randomly.

Pair Corralation between Northern Superior and Baru Gold

Assuming the 90 days horizon Northern Superior Resources is expected to generate 0.34 times more return on investment than Baru Gold. However, Northern Superior Resources is 2.95 times less risky than Baru Gold. It trades about 0.12 of its potential returns per unit of risk. Baru Gold Corp is currently generating about -0.05 per unit of risk. If you would invest  33.00  in Northern Superior Resources on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Northern Superior Resources or generate 21.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Northern Superior Resources  vs.  Baru Gold Corp

Northern Superior

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Superior Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Northern Superior reported solid returns over the last few months and may actually be approaching a breakup point.

Baru Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baru Gold Corp 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Northern Superior and Baru Gold

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

The idea behind Northern Superior Resources and Baru 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.