Correlation Between Sterling Metals and Ascendant Resources
Can any of the company-specific risk be diversified away by investing in both Sterling Metals 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 Sterling Metals and Ascendant Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Metals Corp and Ascendant Resources, you can compare the effects of market volatilities on Sterling Metals 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 Sterling Metals with a short position of Ascendant Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and Ascendant Resources.
Diversification Opportunities for Sterling Metals and Ascendant Resources
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sterling and Ascendant is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources and Sterling Metals 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 Sterling Metals Corp 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 Sterling Metals i.e., Sterling Metals and Ascendant Resources go up and down completely randomly.
Pair Corralation between Sterling Metals and Ascendant Resources
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the Ascendant Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Sterling Metals Corp is 2.11 times less risky than Ascendant Resources. The otc stock trades about -0.16 of its potential returns per unit of risk. The Ascendant Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Ascendant Resources on August 28, 2024 and sell it today you would lose (1.00) from holding Ascendant Resources or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. Ascendant Resources
Performance |
| Timeline |
| Sterling Metals Corp |
| Ascendant Resources |
Sterling Metals and Ascendant Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and Ascendant Resources
The main advantage of trading using opposite Sterling Metals and Ascendant Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals 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.The idea behind Sterling Metals Corp and Ascendant 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.| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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