Correlation Between Rackla Metals and Asante Gold

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

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

Diversification Opportunities for Rackla Metals and Asante Gold

-0.09

Correlation Coefficient

Rackla Metals  Asante Gold

Good diversification

The 3 months correlation between Rackla and Asante is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rackla Metals and Asante Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asante Gold and Rackla Metals 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 Rackla Metals are associated (or correlated) with Asante Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asante Gold has no effect on the direction of Rackla Metals i.e., Rackla Metals and Asante Gold go up and down completely randomly.

Pair Corralation between Rackla Metals and Asante Gold

Assuming the 90 days horizon Rackla Metals is expected to under-perform the Asante Gold. In addition to that, Rackla Metals is 1.63 times more volatile than Asante Gold. It trades about -0.16 of its total potential returns per unit of risk. Asante Gold is currently generating about -0.2 per unit of volatility. If you would invest  97.00  in Asante Gold on September 4, 2024 and sell it today you would lose (12.00) from holding Asante Gold or give up 12.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Rackla Metals  vs.  Asante Gold

Rackla Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Rackla Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Asante Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asante Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rackla Metals and Asante Gold

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

The idea behind Rackla Metals and Asante Gold 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.