Correlation Between Ascot Resources and SolGold PLC

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

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

Diversification Opportunities for Ascot Resources and SolGold PLC

0.08

Correlation Coefficient

Ascot Resources  SolGold PLC

Significant diversification

The 3 months correlation between Ascot and SolGold is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ascot Resources and SolGold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolGold PLC and Ascot 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 Ascot Resources are associated (or correlated) with SolGold PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolGold PLC has no effect on the direction of Ascot Resources i.e., Ascot Resources and SolGold PLC go up and down completely randomly.

Pair Corralation between Ascot Resources and SolGold PLC

Assuming the 90 days trading horizon Ascot Resources is expected to under-perform the SolGold PLC. In addition to that, Ascot Resources is 1.16 times more volatile than SolGold PLC. It trades about -0.02 of its total potential returns per unit of risk. SolGold PLC is currently generating about -0.01 per unit of volatility. If you would invest  33.00  in SolGold PLC on October 5, 2024 and sell it today you would lose (19.00) from holding SolGold PLC or give up 57.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ascot Resources  vs.  SolGold PLC

Ascot Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ascot Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ascot Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

SolGold PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolGold PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ascot Resources and SolGold PLC

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

The idea behind Ascot Resources and SolGold PLC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.