Correlation Between BASF SE and GOLDGROUP MINING

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

Diversification Opportunities for BASF SE and GOLDGROUP MINING

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between BASF and GOLDGROUP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and GOLDGROUP MINING INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDGROUP MINING INC and BASF SE 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 BASF SE are associated (or correlated) with GOLDGROUP MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDGROUP MINING INC has no effect on the direction of BASF SE i.e., BASF SE and GOLDGROUP MINING go up and down completely randomly.

Pair Corralation between BASF SE and GOLDGROUP MINING

Assuming the 90 days trading horizon BASF SE is expected to generate 4.43 times less return on investment than GOLDGROUP MINING. But when comparing it to its historical volatility, BASF SE is 1.24 times less risky than GOLDGROUP MINING. It trades about 0.01 of its potential returns per unit of risk. GOLDGROUP MINING INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  65.00  in GOLDGROUP MINING INC on April 25, 2025 and sell it today you would earn a total of  3.00  from holding GOLDGROUP MINING INC or generate 4.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BASF SE  vs.  GOLDGROUP MINING INC

 Performance 
       Timeline  
BASF SE 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days BASF SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BASF SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
GOLDGROUP MINING INC 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in GOLDGROUP MINING INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, GOLDGROUP MINING may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BASF SE and GOLDGROUP MINING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BASF SE and GOLDGROUP MINING

The main advantage of trading using opposite BASF SE and GOLDGROUP MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, GOLDGROUP 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 GOLDGROUP MINING will offset losses from the drop in GOLDGROUP MINING's long position.
The idea behind BASF SE and GOLDGROUP MINING INC 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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