Correlation Between Amani Gold and Resort Savers

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

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

Diversification Opportunities for Amani Gold and Resort Savers

1.0

Correlation Coefficient

Amani Gold  Resort Savers

No risk reduction

The 3 months correlation between Amani and Resort is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Amani Gold Limited and Resort Savers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resort Savers and Amani 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 Amani Gold Limited are associated (or correlated) with Resort Savers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resort Savers has no effect on the direction of Amani Gold i.e., Amani Gold and Resort Savers go up and down completely randomly.

Pair Corralation between Amani Gold and Resort Savers

If you would invest  0.01  in Resort Savers on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Resort Savers or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	4.76%
Values	Daily Returns

Amani Gold Limited  vs.  Resort Savers

Amani Gold Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Resort Savers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resort Savers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Resort Savers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amani Gold and Resort Savers

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

The idea behind Amani Gold Limited and Resort Savers 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.