Correlation Between Merafe Resources and Belysse Group

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

By analyzing existing cross correlation between Merafe Resources Limited and Belysse Group NV, you can compare the effects of market volatilities on Merafe Resources and Belysse Group 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 Merafe Resources with a short position of Belysse Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merafe Resources and Belysse Group.

Diversification Opportunities for Merafe Resources and Belysse Group

0.02

Correlation Coefficient

Merafe Resources  Belysse Group

Significant diversification

The 3 months correlation between Merafe and Belysse is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Merafe Resources Limited and Belysse Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belysse Group NV and Merafe Resources 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 Merafe Resources Limited are associated (or correlated) with Belysse Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belysse Group NV has no effect on the direction of Merafe Resources i.e., Merafe Resources and Belysse Group go up and down completely randomly.

Pair Corralation between Merafe Resources and Belysse Group

Assuming the 90 days horizon Merafe Resources Limited is expected to generate 1.56 times more return on investment than Belysse Group. However, Merafe Resources is 1.56 times more volatile than Belysse Group NV. It trades about 0.02 of its potential returns per unit of risk. Belysse Group NV is currently generating about -0.14 per unit of risk. If you would invest  7.70  in Merafe Resources Limited on September 15, 2024 and sell it today you would lose (0.20) from holding Merafe Resources Limited or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Merafe Resources Limited  vs.  Belysse Group NV

Merafe Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merafe Resources Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Merafe Resources is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Belysse Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Belysse Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Merafe Resources and Belysse Group

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

The idea behind Merafe Resources Limited and Belysse Group NV 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.