Correlation Between Asante Gold and Gold Reserve

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

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

Diversification Opportunities for Asante Gold and Gold Reserve

0.13

Correlation Coefficient

Asante Gold  Gold Reserve

Average diversification

The 3 months correlation between Asante and Gold is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Asante Gold and Gold Reserve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Reserve 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 Gold Reserve. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Reserve has no effect on the direction of Asante Gold i.e., Asante Gold and Gold Reserve go up and down completely randomly.

Pair Corralation between Asante Gold and Gold Reserve

Assuming the 90 days horizon Asante Gold is expected to under-perform the Gold Reserve. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asante Gold is 1.27 times less risky than Gold Reserve. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Gold Reserve is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Gold Reserve on August 31, 2024 and sell it today you would earn a total of  20.00  from holding Gold Reserve or generate 14.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Asante Gold  vs.  Gold Reserve

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.

Gold Reserve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Reserve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Asante Gold and Gold Reserve

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

The idea behind Asante Gold and Gold Reserve 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.