Correlation Between Great Western and Alkane Resources

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

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

Diversification Opportunities for Great Western and Alkane Resources

0.0

Correlation Coefficient

Great Western  Alkane Resources

Pay attention - limited upside

The 3 months correlation between Great and Alkane is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Great Western Minerals and Alkane Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkane Resources and Great Western 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 Great Western Minerals are associated (or correlated) with Alkane Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkane Resources has no effect on the direction of Great Western i.e., Great Western and Alkane Resources go up and down completely randomly.

Pair Corralation between Great Western and Alkane Resources

If you would invest  26.00  in Alkane Resources Limited on September 3, 2024 and sell it today you would earn a total of  5.00  from holding Alkane Resources Limited or generate 19.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Great Western Minerals  vs.  Alkane Resources Limited

Great Western Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alkane Resources

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Great Western and Alkane Resources

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

The idea behind Great Western Minerals and Alkane 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.