Correlation Between BCM Resources and Anson Resources

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

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

Diversification Opportunities for BCM Resources and Anson Resources

-0.23

Correlation Coefficient

BCM Resources  Anson Resources

Very good diversification

The 3 months correlation between BCM and Anson is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding BCM Resources and Anson Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anson Resources and BCM 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 BCM Resources are associated (or correlated) with Anson Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anson Resources has no effect on the direction of BCM Resources i.e., BCM Resources and Anson Resources go up and down completely randomly.

Pair Corralation between BCM Resources and Anson Resources

Assuming the 90 days horizon BCM Resources is expected to generate 1.74 times more return on investment than Anson Resources. However, BCM Resources is 1.74 times more volatile than Anson Resources Limited. It trades about 0.15 of its potential returns per unit of risk. Anson Resources Limited is currently generating about -0.01 per unit of risk. If you would invest  2.50  in BCM Resources on December 27, 2024 and sell it today you would earn a total of  5.50  from holding BCM Resources or generate 220.0% return on investment over 90 days.

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

BCM Resources  vs.  Anson Resources Limited

BCM Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BCM Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BCM Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Anson Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anson Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BCM Resources and Anson Resources

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

The idea behind BCM Resources and Anson Resources Limited 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 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.