Correlation Between Allegiant Gold and Angold Resources

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

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

Diversification Opportunities for Allegiant Gold and Angold Resources

-0.08

Correlation Coefficient

Allegiant Gold  Angold Resources

Good diversification

The 3 months correlation between Allegiant and Angold is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Gold and Angold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angold Resources and Allegiant 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 Allegiant Gold are associated (or correlated) with Angold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angold Resources has no effect on the direction of Allegiant Gold i.e., Allegiant Gold and Angold Resources go up and down completely randomly.

Pair Corralation between Allegiant Gold and Angold Resources

Assuming the 90 days horizon Allegiant Gold is expected to generate 16.54 times less return on investment than Angold Resources. But when comparing it to its historical volatility, Allegiant Gold is 2.5 times less risky than Angold Resources. It trades about 0.01 of its potential returns per unit of risk. Angold Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3.20  in Angold Resources on November 28, 2024 and sell it today you would lose (0.90) from holding Angold Resources or give up 28.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Allegiant Gold  vs.  Angold Resources

Allegiant Gold

Risk-Adjusted Performance

Very Weak

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

Angold Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Angold Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Angold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allegiant Gold and Angold Resources

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

The idea behind Allegiant Gold and Angold Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.