Correlation Between Gold Bull and Phenom Resources

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

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

Diversification Opportunities for Gold Bull and Phenom Resources

0.5

Correlation Coefficient

Gold Bull  Phenom Resources

Very weak diversification

The 3 months correlation between Gold and Phenom is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bull Resources and Phenom Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phenom Resources Corp and Gold Bull 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 Gold Bull Resources are associated (or correlated) with Phenom Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phenom Resources Corp has no effect on the direction of Gold Bull i.e., Gold Bull and Phenom Resources go up and down completely randomly.

Pair Corralation between Gold Bull and Phenom Resources

Assuming the 90 days horizon Gold Bull Resources is expected to generate 2.98 times more return on investment than Phenom Resources. However, Gold Bull is 2.98 times more volatile than Phenom Resources Corp. It trades about 0.08 of its potential returns per unit of risk. Phenom Resources Corp is currently generating about -0.1 per unit of risk. If you would invest  24.00  in Gold Bull Resources on September 13, 2024 and sell it today you would earn a total of  9.00  from holding Gold Bull Resources or generate 37.5% return on investment over 90 days.

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

Gold Bull Resources  vs.  Phenom Resources Corp

Gold Bull Resources

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bull Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gold Bull reported solid returns over the last few months and may actually be approaching a breakup point.

Phenom Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phenom Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Gold Bull and Phenom Resources

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

The idea behind Gold Bull Resources and Phenom Resources Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.