Correlation Between Cerrado Gold and Norsemont Mining
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and Norsemont Mining 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 Cerrado Gold and Norsemont Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold and Norsemont Mining, you can compare the effects of market volatilities on Cerrado Gold and Norsemont Mining 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 Cerrado Gold with a short position of Norsemont Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and Norsemont Mining.
Diversification Opportunities for Cerrado Gold and Norsemont Mining
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cerrado and Norsemont is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining and Cerrado Gold 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 Cerrado Gold are associated (or correlated) with Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and Norsemont Mining go up and down completely randomly.
Pair Corralation between Cerrado Gold and Norsemont Mining
Assuming the 90 days horizon Cerrado Gold is expected to generate 0.82 times more return on investment than Norsemont Mining. However, Cerrado Gold is 1.21 times less risky than Norsemont Mining. It trades about 0.07 of its potential returns per unit of risk. Norsemont Mining is currently generating about 0.06 per unit of risk. If you would invest 15.00 in Cerrado Gold on November 11, 2024 and sell it today you would earn a total of 10.00 from holding Cerrado Gold or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Cerrado Gold vs. Norsemont Mining
Performance |
| Timeline |
| Cerrado Gold |
| Norsemont Mining |
Cerrado Gold and Norsemont Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and Norsemont Mining
The main advantage of trading using opposite Cerrado Gold and Norsemont Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, Norsemont Mining 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 Norsemont Mining will offset losses from the drop in Norsemont Mining's long position.| Cerrado Gold vs. Antioquia Gold | Cerrado Gold vs. Red Pine Exploration | Cerrado Gold vs. Bellevue Gold Limited | Cerrado Gold vs. Asante Gold |
| Norsemont Mining vs. Newcore Gold | Norsemont Mining vs. Cerrado Gold | Norsemont Mining vs. Palamina Corp | Norsemont Mining vs. Gold Springs Resource |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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