Correlation Between Red Pine and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both Red Pine and Ascot 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 Red Pine and Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and Ascot Resources, you can compare the effects of market volatilities on Red Pine and Ascot 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 Red Pine with a short position of Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Ascot Resources.
Diversification Opportunities for Red Pine and Ascot Resources
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Red and Ascot is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and Red Pine 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 Red Pine Exploration are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Red Pine i.e., Red Pine and Ascot Resources go up and down completely randomly.
Pair Corralation between Red Pine and Ascot Resources
Assuming the 90 days horizon Red Pine Exploration is expected to generate 0.45 times more return on investment than Ascot Resources. However, Red Pine Exploration is 2.23 times less risky than Ascot Resources. It trades about 0.02 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.02 per unit of risk. If you would invest 12.00 in Red Pine Exploration on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Red Pine Exploration or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Red Pine Exploration vs. Ascot Resources
Performance |
| Timeline |
| Red Pine Exploration |
| Ascot Resources |
Red Pine and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Ascot Resources
The main advantage of trading using opposite Red Pine and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Ascot 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 Ascot Resources will offset losses from the drop in Ascot Resources' long position.The idea behind Red Pine Exploration and Ascot Resources 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.| Ascot Resources vs. Ressources Minieres Radisson | Ascot Resources vs. Galantas Gold Corp | Ascot Resources vs. Red Pine Exploration | Ascot Resources vs. Kore 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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