Correlation Between West Red and Angkor Resources

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

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

Diversification Opportunities for West Red and Angkor Resources

0.58

Correlation Coefficient

West Red  Angkor Resources

Very weak diversification

The 3 months correlation between West and Angkor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding West Red Lake and Angkor Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angkor Resources Corp and West Red 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 West Red Lake are associated (or correlated) with Angkor Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angkor Resources Corp has no effect on the direction of West Red i.e., West Red and Angkor Resources go up and down completely randomly.

Pair Corralation between West Red and Angkor Resources

Assuming the 90 days horizon West Red Lake is expected to under-perform the Angkor Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, West Red Lake is 2.61 times less risky than Angkor Resources. The otc stock trades about -0.16 of its potential returns per unit of risk. The Angkor Resources Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  8.75  in Angkor Resources Corp on October 7, 2024 and sell it today you would lose (2.15) from holding Angkor Resources Corp or give up 24.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

West Red Lake  vs.  Angkor Resources Corp

West Red Lake

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days West Red Lake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and 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.

Angkor Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Angkor Resources Corp 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 West Red and Angkor Resources

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

The idea behind West Red Lake and Angkor Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.