Correlation Between P2 Gold and Braveheart Resources

Can any of the company-specific risk be diversified away by investing in both P2 Gold and Braveheart 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 P2 Gold and Braveheart Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P2 Gold and Braveheart Resources, you can compare the effects of market volatilities on P2 Gold and Braveheart 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 P2 Gold with a short position of Braveheart Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of P2 Gold and Braveheart Resources.

Diversification Opportunities for P2 Gold and Braveheart Resources

0.04

Correlation Coefficient

P2 Gold  Braveheart Resources

Significant diversification

The 3 months correlation between PGLDF and Braveheart is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding P2 Gold and Braveheart Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braveheart Resources and P2 Gold 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 P2 Gold are associated (or correlated) with Braveheart Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braveheart Resources has no effect on the direction of P2 Gold i.e., P2 Gold and Braveheart Resources go up and down completely randomly.

Pair Corralation between P2 Gold and Braveheart Resources

Assuming the 90 days horizon P2 Gold is expected to generate 1.91 times more return on investment than Braveheart Resources. However, P2 Gold is 1.91 times more volatile than Braveheart Resources. It trades about 0.07 of its potential returns per unit of risk. Braveheart Resources is currently generating about 0.0 per unit of risk. If you would invest  4.40  in P2 Gold on September 1, 2024 and sell it today you would earn a total of  0.70  from holding P2 Gold or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

P2 Gold  vs.  Braveheart Resources

P2 Gold

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in P2 Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, P2 Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Braveheart Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braveheart Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Braveheart Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with P2 Gold and Braveheart Resources

The main advantage of trading using opposite P2 Gold and Braveheart Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P2 Gold position performs unexpectedly, Braveheart 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 Braveheart Resources will offset losses from the drop in Braveheart Resources' long position.

The idea behind P2 Gold and Braveheart 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.