Correlation Between Canstar Resources and Azimut Exploration
Can any of the company-specific risk be diversified away by investing in both Canstar Resources and Azimut Exploration 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 Canstar Resources and Azimut Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canstar Resources and Azimut Exploration, you can compare the effects of market volatilities on Canstar Resources and Azimut Exploration 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 Canstar Resources with a short position of Azimut Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canstar Resources and Azimut Exploration.
Diversification Opportunities for Canstar Resources and Azimut Exploration
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canstar and Azimut is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Canstar Resources and Azimut Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Exploration and Canstar 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 Canstar Resources are associated (or correlated) with Azimut Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Exploration has no effect on the direction of Canstar Resources i.e., Canstar Resources and Azimut Exploration go up and down completely randomly.
Pair Corralation between Canstar Resources and Azimut Exploration
Assuming the 90 days horizon Canstar Resources is expected to generate 2.43 times more return on investment than Azimut Exploration. However, Canstar Resources is 2.43 times more volatile than Azimut Exploration. It trades about 0.0 of its potential returns per unit of risk. Azimut Exploration is currently generating about -0.05 per unit of risk. If you would invest 3.33 in Canstar Resources on August 27, 2024 and sell it today you would lose (0.58) from holding Canstar Resources or give up 17.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canstar Resources vs. Azimut Exploration
Performance |
| Timeline |
| Canstar Resources |
| Azimut Exploration |
Canstar Resources and Azimut Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canstar Resources and Azimut Exploration
The main advantage of trading using opposite Canstar Resources and Azimut Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canstar Resources position performs unexpectedly, Azimut Exploration 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 Azimut Exploration will offset losses from the drop in Azimut Exploration's long position.The idea behind Canstar Resources and Azimut Exploration 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.| Azimut Exploration vs. Edison Cobalt Corp | Azimut Exploration vs. Champion Bear Resources | Azimut Exploration vs. Avarone Metals | Azimut Exploration 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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