Correlation Between Austral Gold and Northern Star
Can any of the company-specific risk be diversified away by investing in both Austral Gold and Northern Star 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 Austral Gold and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austral Gold and Northern Star Resources, you can compare the effects of market volatilities on Austral Gold and Northern Star 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 Austral Gold with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and Northern Star.
Diversification Opportunities for Austral Gold and Northern Star
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Austral and Northern is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources and Austral Gold 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 Austral Gold are associated (or correlated) with Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of Austral Gold i.e., Austral Gold and Northern Star go up and down completely randomly.
Pair Corralation between Austral Gold and Northern Star
Assuming the 90 days trading horizon Austral Gold is expected to generate 1.47 times less return on investment than Northern Star. In addition to that, Austral Gold is 3.47 times more volatile than Northern Star Resources. It trades about 0.02 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.08 per unit of volatility. If you would invest 1,328 in Northern Star Resources on August 25, 2024 and sell it today you would earn a total of 462.00 from holding Northern Star Resources or generate 34.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austral Gold vs. Northern Star Resources
Performance |
| Timeline |
| Austral Gold |
| Northern Star Resources |
Austral Gold and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austral Gold and Northern Star
The main advantage of trading using opposite Austral Gold and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star's long position.| Austral Gold vs. Northern Star Resources | Austral Gold vs. Evolution Mining | Austral Gold vs. Bluescope Steel | Austral Gold vs. Sandfire Resources NL |
| Northern Star vs. Carlton Investments | Northern Star vs. Hutchison Telecommunications | Northern Star vs. BSP Financial Group | Northern Star vs. Air New Zealand |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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