Correlation Between Advance Gold and Aben Resources

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

By analyzing existing cross correlation between Advance Gold Corp and Aben Resources, you can compare the effects of market volatilities on Advance Gold and Aben Resources 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 Advance Gold with a short position of Aben Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advance Gold and Aben Resources.

Diversification Opportunities for Advance Gold and Aben Resources

0.04

Correlation Coefficient

Advance Gold  Aben Resources

Significant diversification

The 3 months correlation between Advance and Aben is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Advance Gold Corp and Aben Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aben Resources and Advance 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 Advance Gold Corp are associated (or correlated) with Aben Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aben Resources has no effect on the direction of Advance Gold i.e., Advance Gold and Aben Resources go up and down completely randomly.

Pair Corralation between Advance Gold and Aben Resources

Assuming the 90 days horizon Advance Gold is expected to generate 3.59 times less return on investment than Aben Resources. But when comparing it to its historical volatility, Advance Gold Corp is 3.84 times less risky than Aben Resources. It trades about 0.04 of its potential returns per unit of risk. Aben Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Aben Resources on October 10, 2024 and sell it today you would lose (15.90) from holding Aben Resources or give up 79.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Advance Gold Corp  vs.  Aben Resources

Advance Gold Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advance Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Advance Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Aben Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Advance Gold and Aben Resources

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

The idea behind Advance Gold Corp and Aben Resources 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 Stocks Directory module to find actively traded stocks across global markets.