Correlation Between Blue Star and Asante Gold

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

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

Diversification Opportunities for Blue Star and Asante Gold

0.77

Correlation Coefficient

Blue Star  Asante Gold

Poor diversification

The 3 months correlation between Blue and Asante is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Blue Star Gold and Asante Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asante Gold and Blue Star 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 Blue Star Gold are associated (or correlated) with Asante Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asante Gold has no effect on the direction of Blue Star i.e., Blue Star and Asante Gold go up and down completely randomly.

Pair Corralation between Blue Star and Asante Gold

Assuming the 90 days horizon Blue Star Gold is expected to generate 2.65 times more return on investment than Asante Gold. However, Blue Star is 2.65 times more volatile than Asante Gold. It trades about 0.21 of its potential returns per unit of risk. Asante Gold is currently generating about 0.07 per unit of risk. If you would invest  3.25  in Blue Star Gold on December 29, 2024 and sell it today you would earn a total of  5.00  from holding Blue Star Gold or generate 153.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blue Star Gold  vs.  Asante Gold

Blue Star Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Blue Star reported solid returns over the last few months and may actually be approaching a breakup point.

Asante Gold

Risk-Adjusted Performance

Modest

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.

Pair Trading with Blue Star and Asante Gold

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

The idea behind Blue Star Gold and Asante Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.