Correlation Between Revival Gold and Cabral Gold

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

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

Diversification Opportunities for Revival Gold and Cabral Gold

0.58

Correlation Coefficient

Revival Gold  Cabral Gold

Very weak diversification

The 3 months correlation between Revival and Cabral is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Revival Gold and Cabral Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabral Gold and Revival 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 Revival Gold are associated (or correlated) with Cabral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabral Gold has no effect on the direction of Revival Gold i.e., Revival Gold and Cabral Gold go up and down completely randomly.

Pair Corralation between Revival Gold and Cabral Gold

Assuming the 90 days horizon Revival Gold is expected to under-perform the Cabral Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Revival Gold is 4.19 times less risky than Cabral Gold. The otc stock trades about -0.08 of its potential returns per unit of risk. The Cabral Gold is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Cabral Gold on September 16, 2024 and sell it today you would lose (2.00) from holding Cabral Gold or give up 11.76% of portfolio value over 90 days.

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

Revival Gold  vs.  Cabral Gold

Revival Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cabral Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabral Gold 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 basic 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 Revival Gold and Cabral Gold

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

The idea behind Revival Gold and Cabral Gold 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.