Correlation Between Beowulf Mining and Golden Metal

Can any of the company-specific risk be diversified away by investing in both Beowulf Mining and Golden Metal 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 Beowulf Mining and Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Beowulf Mining and Golden Metal

-0.52

Correlation Coefficient

Beowulf Mining  Golden Metal

Excellent diversification

The 3 months correlation between Beowulf and Golden is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources and Beowulf Mining 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 Beowulf Mining are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Beowulf Mining i.e., Beowulf Mining and Golden Metal go up and down completely randomly.

Pair Corralation between Beowulf Mining and Golden Metal

Assuming the 90 days trading horizon Beowulf Mining is expected to under-perform the Golden Metal. In addition to that, Beowulf Mining is 1.05 times more volatile than Golden Metal Resources. It trades about -0.18 of its total potential returns per unit of risk. Golden Metal Resources is currently generating about 0.05 per unit of volatility. If you would invest  2,600  in Golden Metal Resources on September 26, 2024 and sell it today you would earn a total of  200.00  from holding Golden Metal Resources or generate 7.69% return on investment over 90 days.

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

Beowulf Mining  vs.  Golden Metal Resources

Beowulf Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Golden Metal Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Golden Metal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beowulf Mining and Golden Metal

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

The idea behind Beowulf Mining and Golden Metal 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.