Correlation Between Big Ridge and American International

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

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

Diversification Opportunities for Big Ridge and American International

0.0

Correlation Coefficient

Big Ridge  American International

Pay attention - limited upside

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

Pair Corralation between Big Ridge and American International

If you would invest  4.00  in Big Ridge Gold on September 15, 2024 and sell it today you would earn a total of  2.70  from holding Big Ridge Gold or generate 67.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Big Ridge Gold  vs.  American International Venture

Big Ridge Gold

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Big Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

American International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American International Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American International is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Big Ridge and American International

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

The idea behind Big Ridge Gold and American International Ventures 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.