Correlation Between Blue Moon and TRX Gold

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

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

Diversification Opportunities for Blue Moon and TRX Gold

0.76

Correlation Coefficient

Blue Moon  TRX Gold

Poor diversification

The 3 months correlation between Blue and TRX is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Zinc and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold Corp and Blue Moon 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 Blue Moon Zinc are associated (or correlated) with TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of Blue Moon i.e., Blue Moon and TRX Gold go up and down completely randomly.

Pair Corralation between Blue Moon and TRX Gold

Assuming the 90 days trading horizon Blue Moon Zinc is expected to generate 1.05 times more return on investment than TRX Gold. However, Blue Moon is 1.05 times more volatile than TRX Gold Corp. It trades about 0.29 of its potential returns per unit of risk. TRX Gold Corp is currently generating about 0.14 per unit of risk. If you would invest  33.00  in Blue Moon Zinc on September 23, 2024 and sell it today you would earn a total of  3.00  from holding Blue Moon Zinc or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Blue Moon Zinc  vs.  TRX Gold Corp

Blue Moon Zinc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Zinc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blue Moon showed solid returns over the last few months and may actually be approaching a breakup point.

TRX Gold Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TRX Gold Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TRX Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Moon and TRX Gold

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

The idea behind Blue Moon Zinc and TRX Gold 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.