Correlation Between SolGold PLC and Ascot Resources
Can any of the company-specific risk be diversified away by investing in both SolGold PLC 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 SolGold PLC and Ascot Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SolGold PLC and Ascot Resources, you can compare the effects of market volatilities on SolGold PLC 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 SolGold PLC with a short position of Ascot Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolGold PLC and Ascot Resources.
Diversification Opportunities for SolGold PLC and Ascot Resources
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SolGold and Ascot is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SolGold PLC and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and SolGold PLC 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 SolGold PLC 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 SolGold PLC i.e., SolGold PLC and Ascot Resources go up and down completely randomly.
Pair Corralation between SolGold PLC and Ascot Resources
Assuming the 90 days trading horizon SolGold PLC is expected to under-perform the Ascot Resources. But the stock apears to be less risky and, when comparing its historical volatility, SolGold PLC is 4.81 times less risky than Ascot Resources. The stock trades about -0.31 of its potential returns per unit of risk. The Ascot Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Ascot Resources on September 1, 2024 and sell it today you would lose (3.00) from holding Ascot Resources or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SolGold PLC vs. Ascot Resources
Performance |
| Timeline |
| SolGold PLC |
| Ascot Resources |
SolGold PLC and Ascot Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SolGold PLC and Ascot Resources
The main advantage of trading using opposite SolGold PLC and Ascot Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SolGold PLC 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.| SolGold PLC vs. Lundin Gold | SolGold PLC vs. Trilogy Metals | SolGold PLC vs. Solaris Resources | SolGold PLC vs. Tudor Gold Corp |
| Ascot Resources vs. Aya Gold Silver | Ascot Resources vs. Gatos Silver | Ascot Resources vs. Upstart Investments | Ascot Resources vs. Bird Construction |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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