Correlation Between Provenance Gold and Usha Resources

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

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

Diversification Opportunities for Provenance Gold and Usha Resources

-0.54

Correlation Coefficient

Provenance Gold  Usha Resources

Excellent diversification

The 3 months correlation between Provenance and Usha is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Provenance Gold Corp and Usha Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usha Resources and Provenance Gold 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 Provenance Gold Corp are associated (or correlated) with Usha Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usha Resources has no effect on the direction of Provenance Gold i.e., Provenance Gold and Usha Resources go up and down completely randomly.

Pair Corralation between Provenance Gold and Usha Resources

Assuming the 90 days horizon Provenance Gold Corp is expected to generate 0.36 times more return on investment than Usha Resources. However, Provenance Gold Corp is 2.79 times less risky than Usha Resources. It trades about 0.09 of its potential returns per unit of risk. Usha Resources is currently generating about -0.04 per unit of risk. If you would invest  19.00  in Provenance Gold Corp on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Provenance Gold Corp or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Provenance Gold Corp  vs.  Usha Resources

Provenance Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Provenance Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Provenance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Usha Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usha Resources 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Provenance Gold and Usha Resources

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

The idea behind Provenance Gold Corp and Usha Resources 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.