Correlation Between Asante Gold and Paramount Gold

Can any of the company-specific risk be diversified away by investing in both Asante Gold and Paramount 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 Paramount 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 Paramount Gold Nevada, you can compare the effects of market volatilities on Asante Gold and Paramount 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 Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asante Gold and Paramount Gold.

Diversification Opportunities for Asante Gold and Paramount Gold

0.15

Correlation Coefficient

Asante Gold  Paramount Gold

Average diversification

The 3 months correlation between Asante and Paramount is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Asante Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada 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 Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Asante Gold i.e., Asante Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Asante Gold and Paramount Gold

Assuming the 90 days horizon Asante Gold is expected to under-perform the Paramount Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asante Gold is 1.03 times less risky than Paramount Gold. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Paramount Gold Nevada is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Paramount Gold Nevada on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Paramount Gold Nevada or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Asante Gold  vs.  Paramount Gold Nevada

Asante Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asante Gold 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Paramount Gold Nevada

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Asante Gold and Paramount Gold

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

The idea behind Asante Gold and Paramount Gold Nevada 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.