Correlation Between Puma Exploration and Cerrado Gold
Can any of the company-specific risk be diversified away by investing in both Puma Exploration 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 Puma Exploration and Cerrado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Exploration and Cerrado Gold, you can compare the effects of market volatilities on Puma Exploration 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 Puma Exploration with a short position of Cerrado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Exploration and Cerrado Gold.
Diversification Opportunities for Puma Exploration and Cerrado Gold
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Puma and Cerrado is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Puma Exploration and Cerrado Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerrado Gold and Puma Exploration 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 Puma Exploration 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 Puma Exploration i.e., Puma Exploration and Cerrado Gold go up and down completely randomly.
Pair Corralation between Puma Exploration and Cerrado Gold
Assuming the 90 days horizon Puma Exploration is expected to generate 0.86 times more return on investment than Cerrado Gold. However, Puma Exploration is 1.16 times less risky than Cerrado Gold. It trades about 0.02 of its potential returns per unit of risk. Cerrado Gold is currently generating about -0.07 per unit of risk. If you would invest 6.00 in Puma Exploration on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Puma Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Puma Exploration vs. Cerrado Gold
Performance |
| Timeline |
| Puma Exploration |
| Cerrado Gold |
Puma Exploration and Cerrado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Puma Exploration and Cerrado Gold
The main advantage of trading using opposite Puma Exploration and Cerrado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Exploration 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.| Puma Exploration vs. Aurion Resources | Puma Exploration vs. Liberty Gold Corp | Puma Exploration vs. Orezone Gold Corp | Puma Exploration vs. Fortuna Silver Mines |
| Cerrado Gold vs. Aurion Resources | Cerrado Gold vs. Liberty Gold Corp | Cerrado Gold vs. Orezone Gold Corp | Cerrado Gold vs. Fortuna Silver Mines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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