Correlation Between Palamina Corp and Bellevue Gold

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

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

Diversification Opportunities for Palamina Corp and Bellevue Gold

0.23

Correlation Coefficient

Palamina Corp  Bellevue Gold

Modest diversification

The 3 months correlation between Palamina and Bellevue is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp 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 Palamina Corp 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 Palamina Corp 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 Palamina Corp i.e., Palamina Corp and Bellevue Gold go up and down completely randomly.

Pair Corralation between Palamina Corp and Bellevue Gold

Assuming the 90 days horizon Palamina Corp is expected to under-perform the Bellevue Gold. In addition to that, Palamina Corp is 2.49 times more volatile than Bellevue Gold Limited. It trades about -0.06 of its total potential returns per unit of risk. Bellevue Gold Limited is currently generating about -0.01 per unit of volatility. If you would invest  82.00  in Bellevue Gold Limited on November 30, 2024 and sell it today you would lose (3.00) from holding Bellevue Gold Limited or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Palamina Corp  vs.  Bellevue Gold Limited

Palamina Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Palamina 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 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

Very Weak

Over the last 90 days Bellevue Gold Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bellevue Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Palamina Corp and Bellevue Gold

The main advantage of trading using opposite Palamina Corp and Bellevue Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palamina Corp 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 Palamina Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.