Correlation Between Angkor Resources and Spanish Mountain

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

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

Diversification Opportunities for Angkor Resources and Spanish Mountain

0.33

Correlation Coefficient

Angkor Resources  Spanish Mountain

Weak diversification

The 3 months correlation between Angkor and Spanish is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Angkor Resources Corp and Spanish Mountain Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spanish Mountain Gold and Angkor 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 Angkor Resources Corp are associated (or correlated) with Spanish Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spanish Mountain Gold has no effect on the direction of Angkor Resources i.e., Angkor Resources and Spanish Mountain go up and down completely randomly.

Pair Corralation between Angkor Resources and Spanish Mountain

Assuming the 90 days horizon Angkor Resources Corp is expected to generate 1.08 times more return on investment than Spanish Mountain. However, Angkor Resources is 1.08 times more volatile than Spanish Mountain Gold. It trades about 0.29 of its potential returns per unit of risk. Spanish Mountain Gold is currently generating about 0.12 per unit of risk. If you would invest  6.60  in Angkor Resources Corp on December 21, 2024 and sell it today you would earn a total of  12.40  from holding Angkor Resources Corp or generate 187.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Angkor Resources Corp  vs.  Spanish Mountain Gold

Angkor Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Angkor Resources Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Angkor Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Spanish Mountain Gold

Risk-Adjusted Performance

OK

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

Pair Trading with Angkor Resources and Spanish Mountain

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

The idea behind Angkor Resources Corp and Spanish Mountain 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.