Correlation Between Bluestone Resources and Predictive Discovery
Can any of the company-specific risk be diversified away by investing in both Bluestone Resources and Predictive Discovery 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 Bluestone Resources and Predictive Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluestone Resources and Predictive Discovery Limited, you can compare the effects of market volatilities on Bluestone Resources and Predictive Discovery 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 Bluestone Resources with a short position of Predictive Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluestone Resources and Predictive Discovery.
Diversification Opportunities for Bluestone Resources and Predictive Discovery
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bluestone and Predictive is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bluestone Resources and Predictive Discovery Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Discovery and Bluestone Resources 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 Bluestone Resources are associated (or correlated) with Predictive Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Discovery has no effect on the direction of Bluestone Resources i.e., Bluestone Resources and Predictive Discovery go up and down completely randomly.
Pair Corralation between Bluestone Resources and Predictive Discovery
Assuming the 90 days horizon Bluestone Resources is expected to generate 0.4 times more return on investment than Predictive Discovery. However, Bluestone Resources is 2.51 times less risky than Predictive Discovery. It trades about 0.01 of its potential returns per unit of risk. Predictive Discovery Limited is currently generating about -0.09 per unit of risk. If you would invest 23.00 in Bluestone Resources on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Bluestone Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluestone Resources vs. Predictive Discovery Limited
Performance |
| Timeline |
| Bluestone Resources |
| Predictive Discovery |
Bluestone Resources and Predictive Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluestone Resources and Predictive Discovery
The main advantage of trading using opposite Bluestone Resources and Predictive Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluestone Resources position performs unexpectedly, Predictive Discovery 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 Predictive Discovery will offset losses from the drop in Predictive Discovery's long position.The idea behind Bluestone Resources and Predictive Discovery Limited 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.| Predictive Discovery vs. Aurion Resources | Predictive Discovery vs. Liberty Gold Corp | Predictive Discovery vs. Orezone Gold Corp | Predictive Discovery vs. Fortuna Silver Mines |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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