Correlation Between Asante Gold and Dakota Gold

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

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

Diversification Opportunities for Asante Gold and Dakota Gold

0.31

Correlation Coefficient

Asante Gold  Dakota Gold

Weak diversification

The 3 months correlation between Asante and Dakota is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Asante Gold and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp and Asante 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 Asante Gold are associated (or correlated) with Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of Asante Gold i.e., Asante Gold and Dakota Gold go up and down completely randomly.

Pair Corralation between Asante Gold and Dakota Gold

Assuming the 90 days horizon Asante Gold is expected to under-perform the Dakota Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asante Gold is 1.01 times less risky than Dakota Gold. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Dakota Gold Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  266.00  in Dakota Gold Corp on September 4, 2024 and sell it today you would lose (52.00) from holding Dakota Gold Corp or give up 19.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Asante Gold  vs.  Dakota Gold Corp

Asante Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asante Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dakota Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dakota Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Asante Gold and Dakota Gold

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

The idea behind Asante Gold and Dakota Gold Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.