Correlation Between West African and American Pacific
Can any of the company-specific risk be diversified away by investing in both West African and American Pacific 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 West African and American Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between West African Resources and American Pacific Mining, you can compare the effects of market volatilities on West African and American Pacific 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 West African with a short position of American Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of West African and American Pacific.
Diversification Opportunities for West African and American Pacific
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between West and American is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding West African Resources and American Pacific Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Pacific Mining and West African 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 West African Resources are associated (or correlated) with American Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Pacific Mining has no effect on the direction of West African i.e., West African and American Pacific go up and down completely randomly.
Pair Corralation between West African and American Pacific
Assuming the 90 days horizon West African Resources is expected to under-perform the American Pacific. But the pink sheet apears to be less risky and, when comparing its historical volatility, West African Resources is 3.63 times less risky than American Pacific. The pink sheet trades about -0.21 of its potential returns per unit of risk. The American Pacific Mining is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 9.27 in American Pacific Mining on September 2, 2024 and sell it today you would earn a total of 8.73 from holding American Pacific Mining or generate 94.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
West African Resources vs. American Pacific Mining
Performance |
| Timeline |
| West African Resources |
| American Pacific Mining |
West African and American Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with West African and American Pacific
The main advantage of trading using opposite West African and American Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if West African position performs unexpectedly, American Pacific 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 American Pacific will offset losses from the drop in American Pacific's long position.| West African vs. Aurion Resources | West African vs. Rio2 Limited | West African vs. Palamina Corp | West African vs. BTU Metals Corp |
| American Pacific vs. Westward Gold | American Pacific vs. Heliostar Metals | American Pacific vs. Revival Gold | American Pacific vs. Cabral Gold |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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