Correlation Between Braveheart Resources and Pacific Ridge

Can any of the company-specific risk be diversified away by investing in both Braveheart Resources and Pacific Ridge 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 Pacific Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Braveheart Resources and Pacific Ridge Exploration, you can compare the effects of market volatilities on Braveheart Resources and Pacific Ridge 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 Pacific Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braveheart Resources and Pacific Ridge.

Diversification Opportunities for Braveheart Resources and Pacific Ridge

0.58

Correlation Coefficient

Braveheart Resources  Pacific Ridge

Very weak diversification

The 3 months correlation between Braveheart and Pacific is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Braveheart Resources and Pacific Ridge Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Ridge 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 Pacific Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Ridge Exploration has no effect on the direction of Braveheart Resources i.e., Braveheart Resources and Pacific Ridge go up and down completely randomly.

Pair Corralation between Braveheart Resources and Pacific Ridge

Assuming the 90 days horizon Braveheart Resources is expected to generate 0.58 times more return on investment than Pacific Ridge. However, Braveheart Resources is 1.73 times less risky than Pacific Ridge. It trades about 0.05 of its potential returns per unit of risk. Pacific Ridge Exploration is currently generating about 0.01 per unit of risk. If you would invest  2.30  in Braveheart Resources on August 30, 2024 and sell it today you would earn a total of  0.56  from holding Braveheart Resources or generate 24.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.91%
Values	Daily Returns

Braveheart Resources  vs.  Pacific Ridge Exploration

Braveheart Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Braveheart Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pacific Ridge Exploration

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Ridge Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pacific Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Braveheart Resources and Pacific Ridge

The main advantage of trading using opposite Braveheart Resources and Pacific Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braveheart Resources position performs unexpectedly, Pacific Ridge 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 Pacific Ridge will offset losses from the drop in Pacific Ridge's long position.

The idea behind Braveheart Resources and Pacific Ridge 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.