Correlation Between Base Resources and GéoMégA Resources
Can any of the company-specific risk be diversified away by investing in both Base Resources and GéoMégA Resources 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 GéoMégA Resources 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 GoMgA Resources, you can compare the effects of market volatilities on Base Resources and GéoMégA Resources 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 GéoMégA Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Base Resources and GéoMégA Resources.
Diversification Opportunities for Base Resources and GéoMégA Resources
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Base and GéoMégA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Base Resources Limited and GoMgA Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GéoMégA Resources 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 GéoMégA Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GéoMégA Resources has no effect on the direction of Base Resources i.e., Base Resources and GéoMégA Resources go up and down completely randomly.
Pair Corralation between Base Resources and GéoMégA Resources
Assuming the 90 days horizon Base Resources Limited is expected to generate 2.14 times more return on investment than GéoMégA Resources. However, Base Resources is 2.14 times more volatile than GoMgA Resources. It trades about 0.08 of its potential returns per unit of risk. GoMgA Resources is currently generating about 0.01 per unit of risk. If you would invest 5.49 in Base Resources Limited on September 1, 2024 and sell it today you would earn a total of 14.51 from holding Base Resources Limited or generate 264.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.87% |
| Values | Daily Returns |
Base Resources Limited vs. GoMgA Resources
Performance |
| Timeline |
| Base Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| GéoMégA Resources |
Base Resources and GéoMégA Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Base Resources and GéoMégA Resources
The main advantage of trading using opposite Base Resources and GéoMégA Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Base Resources position performs unexpectedly, GéoMégA Resources 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 GéoMégA Resources will offset losses from the drop in GéoMégA Resources' 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 |
| GéoMégA Resources vs. Infinite Ore Corp | GéoMégA Resources vs. FPX Nickel Corp | GéoMégA Resources vs. Power Metals Corp | GéoMégA Resources vs. International Lithium 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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