Correlation Between Stone Gold and BCM Resources

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

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

Diversification Opportunities for Stone Gold and BCM Resources

0.0

Correlation Coefficient

Stone Gold  BCM Resources

Pay attention - limited upside

The 3 months correlation between Stone and BCM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stone Gold and BCM Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCM Resources and Stone 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 Stone Gold are associated (or correlated) with BCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCM Resources has no effect on the direction of Stone Gold i.e., Stone Gold and BCM Resources go up and down completely randomly.

Pair Corralation between Stone Gold and BCM Resources

Assuming the 90 days horizon Stone Gold is expected to under-perform the BCM Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Stone Gold is 1.21 times less risky than BCM Resources. The pink sheet trades about -0.04 of its potential returns per unit of risk. The BCM Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.84  in BCM Resources on September 1, 2024 and sell it today you would lose (4.31) from holding BCM Resources or give up 54.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Stone Gold  vs.  BCM Resources

Stone Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

BCM Resources

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BCM Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BCM Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stone Gold and BCM Resources

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

The idea behind Stone Gold and BCM 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.