Correlation Between Critical Elements and Anson Resources

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

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

Diversification Opportunities for Critical Elements and Anson Resources

0.78

Correlation Coefficient

Critical Elements  Anson Resources

Poor diversification

The 3 months correlation between Critical and Anson is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Critical Elements and Anson Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anson Resources and Critical Elements 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 Critical Elements 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 Critical Elements i.e., Critical Elements and Anson Resources go up and down completely randomly.

Pair Corralation between Critical Elements and Anson Resources

Assuming the 90 days horizon Critical Elements is expected to under-perform the Anson Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Critical Elements is 1.83 times less risky than Anson Resources. The otc stock trades about -0.05 of its potential returns per unit of risk. The Anson Resources Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Anson Resources Limited on October 10, 2024 and sell it today you would lose (7.61) from holding Anson Resources Limited or give up 54.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Critical Elements  vs.  Anson Resources Limited

Critical Elements

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Elements has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Anson Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Anson Resources Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Anson Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Critical Elements and Anson Resources

The main advantage of trading using opposite Critical Elements and Anson Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Elements 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 Critical Elements 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.