Correlation Between Collective Mining and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Collective Mining and Cerrado Gold 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 Collective Mining and Cerrado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collective Mining and Cerrado Gold, you can compare the effects of market volatilities on Collective Mining and Cerrado Gold 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 Collective Mining with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collective Mining and Cerrado Gold.
Diversification Opportunities for Collective Mining and Cerrado Gold
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collective and Cerrado is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Collective Mining and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold and Collective Mining 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 Collective Mining are associated (or correlated) with Cerrado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerrado Gold has no effect on the direction of Collective Mining i.e., Collective Mining and Cerrado Gold go up and down completely randomly.
Pair Corralation between Collective Mining and Cerrado Gold
Assuming the 90 days horizon Collective Mining is expected to under-perform the Cerrado Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Collective Mining is 3.27 times less risky than Cerrado Gold. The otc stock trades about -0.02 of its potential returns per unit of risk. The Cerrado Gold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 56.00 in Cerrado Gold on August 26, 2024 and sell it today you would lose (29.00) from holding Cerrado Gold or give up 51.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.62% |
| Values | Daily Returns |
Collective Mining vs. Cerrado Gold
Performance |
| Timeline |
| Collective Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Cerrado Gold |
Collective Mining and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collective Mining and Cerrado Gold
The main advantage of trading using opposite Collective Mining and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collective Mining position performs unexpectedly, Cerrado Gold 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 Cerrado Gold will offset losses from the drop in Cerrado Gold's long position.| Collective Mining vs. Aurion Resources | Collective Mining vs. Bluestone Resources | Collective Mining vs. Cartier Resources | Collective Mining vs. Antioquia Gold |
| Cerrado Gold vs. Antioquia Gold | Cerrado Gold vs. Red Pine Exploration | Cerrado Gold vs. Bellevue Gold Limited | Cerrado Gold vs. Asante Gold |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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