Correlation Between Big Ridge and Asante Gold

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

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

Diversification Opportunities for Big Ridge and Asante Gold

-0.46

Correlation Coefficient

Big Ridge  Asante Gold

Very good diversification

The 3 months correlation between Big and Asante is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Asante Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asante Gold and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Asante Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asante Gold has no effect on the direction of Big Ridge i.e., Big Ridge and Asante Gold go up and down completely randomly.

Pair Corralation between Big Ridge and Asante Gold

Assuming the 90 days horizon Big Ridge Gold is expected to under-perform the Asante Gold. In addition to that, Big Ridge is 2.4 times more volatile than Asante Gold. It trades about -0.01 of its total potential returns per unit of risk. Asante Gold is currently generating about 0.07 per unit of volatility. If you would invest  72.00  in Asante Gold on December 28, 2024 and sell it today you would earn a total of  8.00  from holding Asante Gold or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Big Ridge Gold  vs.  Asante Gold

Big Ridge Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Big Ridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Big Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Asante Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asante Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Asante Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Big Ridge and Asante Gold

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

The idea behind Big Ridge Gold and Asante Gold 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.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.