Correlation Between Bullion Gold and Cypress Development

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

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

Diversification Opportunities for Bullion Gold and Cypress Development

0.0

Correlation Coefficient

Bullion Gold  Cypress Development

Pay attention - limited upside

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

Pair Corralation between Bullion Gold and Cypress Development

Assuming the 90 days horizon Bullion Gold Resources is expected to generate 2.41 times more return on investment than Cypress Development. However, Bullion Gold is 2.41 times more volatile than Cypress Development Corp. It trades about 0.04 of its potential returns per unit of risk. Cypress Development Corp is currently generating about -0.03 per unit of risk. If you would invest  2.98  in Bullion Gold Resources on October 10, 2024 and sell it today you would lose (1.14) from holding Bullion Gold Resources or give up 38.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Bullion Gold Resources  vs.  Cypress Development Corp

Bullion Gold Resources

Risk-Adjusted Performance

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Very Weak

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

Cypress Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cypress Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic 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 Bullion Gold and Cypress Development

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

The idea behind Bullion Gold Resources and Cypress Development Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..