Correlation Between China Rare and Ascendant Resources
Can any of the company-specific risk be diversified away by investing in both China Rare and Ascendant 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 China Rare and Ascendant Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Rare Earth and Ascendant Resources, you can compare the effects of market volatilities on China Rare and Ascendant 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 China Rare with a short position of Ascendant Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Rare and Ascendant Resources.
Diversification Opportunities for China Rare and Ascendant Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Ascendant is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding China Rare Earth and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources and China Rare 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 China Rare Earth are associated (or correlated) with Ascendant Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendant Resources has no effect on the direction of China Rare i.e., China Rare and Ascendant Resources go up and down completely randomly.
Pair Corralation between China Rare and Ascendant Resources
Assuming the 90 days horizon China Rare Earth is expected to generate 2.26 times more return on investment than Ascendant Resources. However, China Rare is 2.26 times more volatile than Ascendant Resources. It trades about 0.08 of its potential returns per unit of risk. Ascendant Resources is currently generating about 0.02 per unit of risk. If you would invest 5.00 in China Rare Earth on September 1, 2024 and sell it today you would earn a total of 0.00 from holding China Rare Earth or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Rare Earth vs. Ascendant Resources
Performance |
| Timeline |
| China Rare Earth |
| Ascendant Resources |
China Rare and Ascendant Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Rare and Ascendant Resources
The main advantage of trading using opposite China Rare and Ascendant Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Rare position performs unexpectedly, Ascendant 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 Ascendant Resources will offset losses from the drop in Ascendant Resources' long position.| China Rare vs. Edison Cobalt Corp | China Rare vs. Baroyeca Gold Silver | China Rare vs. Aurelia Metals Limited | China Rare vs. Champion Bear Resources |
| Ascendant Resources vs. Edison Cobalt Corp | Ascendant Resources vs. Champion Bear Resources | Ascendant Resources vs. Avarone Metals | Ascendant Resources vs. Adriatic Metals PLC |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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