Correlation Between Revival Gold and Big Ridge

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

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

Diversification Opportunities for Revival Gold and Big Ridge

0.7

Correlation Coefficient

Revival Gold  Big Ridge

Poor diversification

The 3 months correlation between Revival and Big is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold and Revival 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 Revival Gold are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Revival Gold i.e., Revival Gold and Big Ridge go up and down completely randomly.

Pair Corralation between Revival Gold and Big Ridge

Assuming the 90 days horizon Revival Gold is expected to generate 250.5 times less return on investment than Big Ridge. But when comparing it to its historical volatility, Revival Gold is 2.3 times less risky than Big Ridge. It trades about 0.0 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Big Ridge Gold on October 21, 2024 and sell it today you would earn a total of  3.00  from holding Big Ridge Gold or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Revival Gold  vs.  Big Ridge Gold

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revival Gold 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 technical and fundamental 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.

Big Ridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Revival Gold and Big Ridge

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

The idea behind Revival Gold and Big Ridge Gold 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.