Correlation Between Black Rock and Jade Gas
Can any of the company-specific risk be diversified away by investing in both Black Rock and Jade Gas 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 Black Rock and Jade Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Jade Gas Holdings, you can compare the effects of market volatilities on Black Rock and Jade Gas 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 Black Rock with a short position of Jade Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Jade Gas.
Diversification Opportunities for Black Rock and Jade Gas
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Black and Jade is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Jade Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jade Gas Holdings and Black Rock 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 Black Rock Mining are associated (or correlated) with Jade Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jade Gas Holdings has no effect on the direction of Black Rock i.e., Black Rock and Jade Gas go up and down completely randomly.
Pair Corralation between Black Rock and Jade Gas
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Jade Gas. But the stock apears to be less risky and, when comparing its historical volatility, Black Rock Mining is 1.15 times less risky than Jade Gas. The stock trades about -0.03 of its potential returns per unit of risk. The Jade Gas Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4.50 in Jade Gas Holdings on September 2, 2024 and sell it today you would lose (0.60) from holding Jade Gas Holdings or give up 13.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Jade Gas Holdings
Performance |
| Timeline |
| Black Rock Mining |
| Jade Gas Holdings |
Black Rock and Jade Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Jade Gas
The main advantage of trading using opposite Black Rock and Jade Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Jade Gas 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 Jade Gas will offset losses from the drop in Jade Gas' long position.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
| Jade Gas vs. Seven West Media | Jade Gas vs. Autosports Group | Jade Gas vs. Ora Banda Mining | Jade Gas vs. Black Rock Mining |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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