Correlation Between Braveheart Resources and Arctic Star

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

Diversification Opportunities for Braveheart Resources and Arctic Star

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Braveheart and Arctic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Braveheart Resources and Arctic Star Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Star Exploration and Braveheart Resources 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 Braveheart Resources are associated (or correlated) with Arctic Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Star Exploration has no effect on the direction of Braveheart Resources i.e., Braveheart Resources and Arctic Star go up and down completely randomly.

Pair Corralation between Braveheart Resources and Arctic Star

Assuming the 90 days horizon Braveheart Resources is expected to generate 2.11 times less return on investment than Arctic Star. But when comparing it to its historical volatility, Braveheart Resources is 1.76 times less risky than Arctic Star. It trades about 0.15 of its potential returns per unit of risk. Arctic Star Exploration is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.72  in Arctic Star Exploration on October 23, 2024 and sell it today you would earn a total of  0.28  from holding Arctic Star Exploration or generate 38.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Braveheart Resources  vs.  Arctic Star Exploration

 Performance 
       Timeline  
Braveheart Resources 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Braveheart Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Braveheart Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Arctic Star Exploration 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Star Exploration are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Arctic Star reported solid returns over the last few months and may actually be approaching a breakup point.

Braveheart Resources and Arctic Star Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Braveheart Resources and Arctic Star

The main advantage of trading using opposite Braveheart Resources and Arctic Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braveheart Resources position performs unexpectedly, Arctic Star 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 Arctic Star will offset losses from the drop in Arctic Star's long position.
The idea behind Braveheart Resources and Arctic Star Exploration 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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