Correlation Between Northern Star and Askari Metals
Can any of the company-specific risk be diversified away by investing in both Northern Star and Askari Metals 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 Northern Star and Askari Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Askari Metals, you can compare the effects of market volatilities on Northern Star and Askari Metals 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 Northern Star with a short position of Askari Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Askari Metals.
Diversification Opportunities for Northern Star and Askari Metals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and Askari is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources and Askari Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Askari Metals and Northern Star 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 Northern Star Resources are associated (or correlated) with Askari Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Askari Metals has no effect on the direction of Northern Star i.e., Northern Star and Askari Metals go up and down completely randomly.
Pair Corralation between Northern Star and Askari Metals
Assuming the 90 days trading horizon Northern Star Resources is expected to generate 0.18 times more return on investment than Askari Metals. However, Northern Star Resources is 5.66 times less risky than Askari Metals. It trades about 0.64 of its potential returns per unit of risk. Askari Metals is currently generating about 0.07 per unit of risk. If you would invest 1,550 in Northern Star Resources on October 22, 2024 and sell it today you would earn a total of 195.00 from holding Northern Star Resources or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Northern Star Resources vs. Askari Metals
Performance |
| Timeline |
| Northern Star Resources |
| Askari Metals |
Northern Star and Askari Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Askari Metals
The main advantage of trading using opposite Northern Star and Askari Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star position performs unexpectedly, Askari Metals 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 Askari Metals will offset losses from the drop in Askari Metals' long position.| Northern Star vs. Step One Clothing | Northern Star vs. ACDC Metals | Northern Star vs. Black Rock Mining | Northern Star vs. Insignia Financial |
| Askari Metals vs. Northern Star Resources | Askari Metals vs. Evolution Mining | Askari Metals vs. Bluescope Steel | Askari Metals vs. De Grey Mining |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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