Correlation Between Denison Mines and Aston Bay

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

By analyzing existing cross correlation between Denison Mines Corp and Aston Bay Holdings, you can compare the effects of market volatilities on Denison Mines and Aston Bay 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 Denison Mines with a short position of Aston Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Denison Mines and Aston Bay.

Diversification Opportunities for Denison Mines and Aston Bay

0.29

Correlation Coefficient

Denison Mines  Aston Bay

Modest diversification

The 3 months correlation between Denison and Aston is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Denison Mines Corp and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings and Denison Mines 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 Denison Mines Corp are associated (or correlated) with Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Denison Mines i.e., Denison Mines and Aston Bay go up and down completely randomly.

Pair Corralation between Denison Mines and Aston Bay

Assuming the 90 days trading horizon Denison Mines Corp is expected to under-perform the Aston Bay. But the stock apears to be less risky and, when comparing its historical volatility, Denison Mines Corp is 2.19 times less risky than Aston Bay. The stock trades about 0.0 of its potential returns per unit of risk. The Aston Bay Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Aston Bay Holdings on October 23, 2024 and sell it today you would earn a total of  1.00  from holding Aston Bay Holdings or generate 20.0% return on investment over 90 days.

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

Denison Mines Corp  vs.  Aston Bay Holdings

Denison Mines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Denison Mines is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Aston Bay Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Bay Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Denison Mines and Aston Bay

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

The idea behind Denison Mines Corp and Aston Bay Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.