Correlation Between Base Resources and Geodrill
Can any of the company-specific risk be diversified away by investing in both Base Resources and Geodrill 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 Base Resources and Geodrill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Base Resources Limited and Geodrill Limited, you can compare the effects of market volatilities on Base Resources and Geodrill 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 Base Resources with a short position of Geodrill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Base Resources and Geodrill.
Diversification Opportunities for Base Resources and Geodrill
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Base and Geodrill is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Base Resources Limited and Geodrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geodrill Limited and Base 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 Base Resources Limited are associated (or correlated) with Geodrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geodrill Limited has no effect on the direction of Base Resources i.e., Base Resources and Geodrill go up and down completely randomly.
Pair Corralation between Base Resources and Geodrill
Assuming the 90 days horizon Base Resources Limited is expected to generate 4.86 times more return on investment than Geodrill. However, Base Resources is 4.86 times more volatile than Geodrill Limited. It trades about 0.05 of its potential returns per unit of risk. Geodrill Limited is currently generating about 0.02 per unit of risk. If you would invest 11.00 in Base Resources Limited on November 1, 2024 and sell it today you would earn a total of 9.00 from holding Base Resources Limited or generate 81.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 83.54% |
| Values | Daily Returns |
Base Resources Limited vs. Geodrill Limited
Performance |
| Timeline |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Geodrill Limited |
Base Resources and Geodrill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Base Resources and Geodrill
The main advantage of trading using opposite Base Resources and Geodrill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Base Resources position performs unexpectedly, Geodrill 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 Geodrill will offset losses from the drop in Geodrill's long position.| Base Resources vs. Macmahon Holdings Limited | Base Resources vs. Rokmaster Resources Corp | Base Resources vs. Hudson Resources | Base Resources vs. Thunder Gold Corp |
| Geodrill vs. Macmahon Holdings Limited | Geodrill vs. Rokmaster Resources Corp | Geodrill vs. Hudson Resources | Geodrill vs. Thunder Gold Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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