Correlation Between Lavras Gold and Nine Mile

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Can any of the company-specific risk be diversified away by investing in both Lavras Gold and Nine Mile 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 Lavras Gold and Nine Mile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lavras Gold Corp and Nine Mile Metals, you can compare the effects of market volatilities on Lavras Gold and Nine Mile 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 Lavras Gold with a short position of Nine Mile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lavras Gold and Nine Mile.

Diversification Opportunities for Lavras Gold and Nine Mile

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Lavras and Nine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lavras Gold Corp and Nine Mile Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Mile Metals and Lavras 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 Lavras Gold Corp are associated (or correlated) with Nine Mile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Mile Metals has no effect on the direction of Lavras Gold i.e., Lavras Gold and Nine Mile go up and down completely randomly.

Pair Corralation between Lavras Gold and Nine Mile

Assuming the 90 days horizon Lavras Gold Corp is expected to generate 0.95 times more return on investment than Nine Mile. However, Lavras Gold Corp is 1.06 times less risky than Nine Mile. It trades about 0.1 of its potential returns per unit of risk. Nine Mile Metals is currently generating about -0.38 per unit of risk. If you would invest  157.00  in Lavras Gold Corp on November 4, 2024 and sell it today you would earn a total of  13.00  from holding Lavras Gold Corp or generate 8.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy86.36%
ValuesDaily Returns

Lavras Gold Corp  vs.  Nine Mile Metals

 Performance 
       Timeline  
Lavras Gold Corp 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lavras Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Lavras Gold may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Nine Mile Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nine Mile Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lavras Gold and Nine Mile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lavras Gold and Nine Mile

The main advantage of trading using opposite Lavras Gold and Nine Mile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lavras Gold position performs unexpectedly, Nine Mile 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 Nine Mile will offset losses from the drop in Nine Mile's long position.
The idea behind Lavras Gold Corp and Nine Mile Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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