Correlation Between Belo Sun and Torex Gold

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

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

Diversification Opportunities for Belo Sun and Torex Gold

0.77

Correlation Coefficient

Belo Sun  Torex Gold

Poor diversification

The 3 months correlation between Belo and Torex is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Belo Sun Mining and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources and Belo Sun 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 Belo Sun Mining are associated (or correlated) with Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Belo Sun i.e., Belo Sun and Torex Gold go up and down completely randomly.

Pair Corralation between Belo Sun and Torex Gold

Assuming the 90 days trading horizon Belo Sun Mining is expected to generate 3.16 times more return on investment than Torex Gold. However, Belo Sun is 3.16 times more volatile than Torex Gold Resources. It trades about 0.06 of its potential returns per unit of risk. Torex Gold Resources is currently generating about 0.11 per unit of risk. If you would invest  4.00  in Belo Sun Mining on September 3, 2024 and sell it today you would earn a total of  0.50  from holding Belo Sun Mining or generate 12.5% return on investment over 90 days.

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

Belo Sun Mining  vs.  Torex Gold Resources

Belo Sun Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Belo Sun Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Belo Sun displayed solid returns over the last few months and may actually be approaching a breakup point.

Torex Gold Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Torex Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Belo Sun and Torex Gold

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

The idea behind Belo Sun Mining and Torex Gold 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.