Correlation Between Northern Superior and Roscan Gold

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

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

Diversification Opportunities for Northern Superior and Roscan Gold

0.57

Correlation Coefficient

Northern Superior  Roscan Gold

Very weak diversification

The 3 months correlation between Northern and Roscan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Northern Superior Resources and Roscan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roscan Gold Corp and Northern Superior 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 Northern Superior Resources are associated (or correlated) with Roscan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roscan Gold Corp has no effect on the direction of Northern Superior i.e., Northern Superior and Roscan Gold go up and down completely randomly.

Pair Corralation between Northern Superior and Roscan Gold

Assuming the 90 days horizon Northern Superior Resources is expected to generate 0.41 times more return on investment than Roscan Gold. However, Northern Superior Resources is 2.43 times less risky than Roscan Gold. It trades about 0.11 of its potential returns per unit of risk. Roscan Gold Corp is currently generating about 0.04 per unit of risk. If you would invest  33.00  in Northern Superior Resources on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Northern Superior Resources or generate 21.21% return on investment over 90 days.

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

Northern Superior Resources  vs.  Roscan Gold Corp

Northern Superior

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Superior Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Northern Superior reported solid returns over the last few months and may actually be approaching a breakup point.

Roscan Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roscan Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Roscan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Superior and Roscan Gold

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

The idea behind Northern Superior Resources and Roscan Gold Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.