Correlation Between Auxico Resources and Arctic Star

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

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

Diversification Opportunities for Auxico Resources and Arctic Star

0.0

Correlation Coefficient

Auxico Resources  Arctic Star

Pay attention - limited upside

The 3 months correlation between Auxico and Arctic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Auxico Resources Canada and Arctic Star Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Star Exploration and Auxico 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 Auxico Resources Canada are associated (or correlated) with Arctic Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Star Exploration has no effect on the direction of Auxico Resources i.e., Auxico Resources and Arctic Star go up and down completely randomly.

Pair Corralation between Auxico Resources and Arctic Star

If you would invest  0.92  in Arctic Star Exploration on December 29, 2024 and sell it today you would earn a total of  0.54  from holding Arctic Star Exploration or generate 58.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Auxico Resources Canada  vs.  Arctic Star Exploration

Auxico Resources Canada

Risk-Adjusted Performance

Very Weak

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

Arctic Star Exploration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Star Exploration are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arctic Star reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auxico Resources and Arctic Star

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

The idea behind Auxico Resources Canada and Arctic Star Exploration 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.