Correlation Between Asante Gold and Rise Gold

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

Diversification Opportunities for Asante Gold and Rise Gold

0.01

Correlation Coefficient

Asante Gold  Rise Gold

Significant diversification

The 3 months correlation between Asante and Rise is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Asante Gold and Rise Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rise 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 Rise Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rise Gold Corp has no effect on the direction of Asante Gold i.e., Asante Gold and Rise Gold go up and down completely randomly.

Pair Corralation between Asante Gold and Rise Gold

Assuming the 90 days horizon Asante Gold is expected to generate 3.17 times less return on investment than Rise Gold. But when comparing it to its historical volatility, Asante Gold is 3.9 times less risky than Rise Gold. It trades about 0.07 of its potential returns per unit of risk. Rise Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Rise Gold Corp on December 20, 2024 and sell it today you would lose (0.16) from holding Rise Gold Corp or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

Asante Gold  vs.  Rise Gold Corp

Asante Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asante Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Asante Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Rise Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rise Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Rise Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asante Gold and Rise Gold

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

The idea behind Asante Gold and Rise 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.