Correlation Between BII Railway and Gold Road
Can any of the company-specific risk be diversified away by investing in both BII Railway and Gold Road 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 BII Railway and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and Gold Road Resources, you can compare the effects of market volatilities on BII Railway and Gold Road 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 BII Railway with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Gold Road.
Diversification Opportunities for BII Railway and Gold Road
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between BII and Gold is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and BII Railway 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 BII Railway Transportation are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of BII Railway i.e., BII Railway and Gold Road go up and down completely randomly.
Pair Corralation between BII Railway and Gold Road
Assuming the 90 days horizon BII Railway is expected to generate 12.33 times less return on investment than Gold Road. In addition to that, BII Railway is 1.27 times more volatile than Gold Road Resources. It trades about 0.0 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.03 per unit of volatility. If you would invest 104.00 in Gold Road Resources on October 20, 2024 and sell it today you would earn a total of 34.00 from holding Gold Road Resources or generate 32.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. Gold Road Resources
Performance |
| Timeline |
| BII Railway Transpor |
| Gold Road Resources |
BII Railway and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Gold Road
The main advantage of trading using opposite BII Railway and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| BII Railway vs. Mitsubishi Gas Chemical | BII Railway vs. Siamgas And Petrochemicals | BII Railway vs. Federal Agricultural Mortgage | BII Railway vs. WIMFARM SA EO |
| Gold Road vs. KIMBALL ELECTRONICS | Gold Road vs. Richardson Electronics | Gold Road vs. STMicroelectronics NV | Gold Road vs. Cairo Communication SpA |
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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