Correlation Between American CuMo and Bullion Gold

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

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

Diversification Opportunities for American CuMo and Bullion Gold

-0.03

Correlation Coefficient

American CuMo  Bullion Gold

Good diversification

The 3 months correlation between American and Bullion is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding American CuMo Mining and Bullion Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bullion Gold Resources and American CuMo 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 American CuMo Mining are associated (or correlated) with Bullion Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bullion Gold Resources has no effect on the direction of American CuMo i.e., American CuMo and Bullion Gold go up and down completely randomly.

Pair Corralation between American CuMo and Bullion Gold

Assuming the 90 days horizon American CuMo Mining is expected to generate 5.87 times more return on investment than Bullion Gold. However, American CuMo is 5.87 times more volatile than Bullion Gold Resources. It trades about 0.03 of its potential returns per unit of risk. Bullion Gold Resources is currently generating about 0.12 per unit of risk. If you would invest  2.00  in American CuMo Mining on September 15, 2024 and sell it today you would lose (1.00) from holding American CuMo Mining or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

American CuMo Mining  vs.  Bullion Gold Resources

American CuMo Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American CuMo Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, American CuMo reported solid returns over the last few months and may actually be approaching a breakup point.

Bullion Gold Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bullion Gold Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bullion Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American CuMo and Bullion Gold

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

The idea behind American CuMo Mining and Bullion 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.