Correlation Between Pasofino Gold and Labrador Iron

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

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

Diversification Opportunities for Pasofino Gold and Labrador Iron

0.22

Correlation Coefficient

Pasofino Gold  Labrador Iron

Modest diversification

The 3 months correlation between Pasofino and Labrador is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pasofino Gold Limited and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Pasofino 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 Pasofino Gold Limited are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Pasofino Gold i.e., Pasofino Gold and Labrador Iron go up and down completely randomly.

Pair Corralation between Pasofino Gold and Labrador Iron

Assuming the 90 days trading horizon Pasofino Gold Limited is expected to under-perform the Labrador Iron. In addition to that, Pasofino Gold is 3.79 times more volatile than Labrador Iron Ore. It trades about -0.06 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.03 per unit of volatility. If you would invest  3,129  in Labrador Iron Ore on October 26, 2024 and sell it today you would lose (79.00) from holding Labrador Iron Ore or give up 2.52% of portfolio value over 90 days.

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

Pasofino Gold Limited  vs.  Labrador Iron Ore

Pasofino Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pasofino Gold Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Labrador Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labrador Iron Ore has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Labrador Iron is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pasofino Gold and Labrador Iron

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

The idea behind Pasofino Gold Limited and Labrador Iron Ore 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.