Correlation Between BSA and Minbos Resources

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

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

Diversification Opportunities for BSA and Minbos Resources

-0.16

Correlation Coefficient

BSA  Minbos Resources

Good diversification

The 3 months correlation between BSA and Minbos is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BSA and Minbos Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minbos Resources and BSA 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 BSA are associated (or correlated) with Minbos Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minbos Resources has no effect on the direction of BSA i.e., BSA and Minbos Resources go up and down completely randomly.

Pair Corralation between BSA and Minbos Resources

Assuming the 90 days trading horizon BSA is expected to generate 0.42 times more return on investment than Minbos Resources. However, BSA is 2.39 times less risky than Minbos Resources. It trades about 0.08 of its potential returns per unit of risk. Minbos Resources is currently generating about 0.03 per unit of risk. If you would invest  86.00  in BSA on September 25, 2024 and sell it today you would earn a total of  12.00  from holding BSA or generate 13.95% return on investment over 90 days.

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

BSA  vs.  Minbos Resources

BSA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BSA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BSA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Minbos Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minbos Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Minbos Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BSA and Minbos Resources

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

The idea behind BSA and Minbos 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.