Correlation Between Bullion Gold and Neometals

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

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

Diversification Opportunities for Bullion Gold and Neometals

-0.66

Correlation Coefficient

Bullion Gold  Neometals

Excellent diversification

The 3 months correlation between Bullion and Neometals is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bullion Gold Resources and Neometals Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neometals ADR and Bullion 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 Bullion Gold Resources are associated (or correlated) with Neometals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neometals ADR has no effect on the direction of Bullion Gold i.e., Bullion Gold and Neometals go up and down completely randomly.

Pair Corralation between Bullion Gold and Neometals

If you would invest  1.48  in Bullion Gold Resources on September 15, 2024 and sell it today you would earn a total of  0.36  from holding Bullion Gold Resources or generate 24.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Bullion Gold Resources  vs.  Neometals Ltd ADR

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.

Neometals ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Neometals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bullion Gold and Neometals

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

The idea behind Bullion Gold Resources and Neometals Ltd ADR 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.