Correlation Between Alkane Resources and Northern Star
Can any of the company-specific risk be diversified away by investing in both Alkane Resources 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 Alkane Resources and Northern Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alkane Resources Limited and Northern Star Resources, you can compare the effects of market volatilities on Alkane Resources 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 Alkane Resources with a short position of Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkane Resources and Northern Star.
Diversification Opportunities for Alkane Resources and Northern Star
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alkane and Northern is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alkane Resources Limited 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 Alkane Resources 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 Alkane Resources Limited 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 Alkane Resources i.e., Alkane Resources and Northern Star go up and down completely randomly.
Pair Corralation between Alkane Resources and Northern Star
Assuming the 90 days horizon Alkane Resources is expected to generate 3.1 times less return on investment than Northern Star. In addition to that, Alkane Resources is 1.61 times more volatile than Northern Star Resources. It trades about 0.01 of its total potential returns per unit of risk. Northern Star Resources is currently generating about 0.05 per unit of volatility. If you would invest 680.00 in Northern Star Resources on September 2, 2024 and sell it today you would earn a total of 440.00 from holding Northern Star Resources or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.94% |
| Values | Daily Returns |
Alkane Resources Limited vs. Northern Star Resources
Performance |
| Timeline |
| Alkane Resources |
| Northern Star Resources |
Alkane Resources and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alkane Resources and Northern Star
The main advantage of trading using opposite Alkane Resources and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alkane Resources 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.| Alkane Resources vs. Arafura Resources | Alkane Resources vs. Great Western Minerals | Alkane Resources vs. Greenland Minerals And | Alkane Resources vs. Ucore Rare Metals |
| Northern Star vs. Aurion Resources | Northern Star vs. Rio2 Limited | Northern Star vs. Palamina Corp | Northern Star vs. Grande Portage Resources |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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