Correlation Between Ampleforth and Gold Bull

Can any of the company-specific risk be diversified away by investing in both Ampleforth and Gold Bull 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 Ampleforth and Gold Bull into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ampleforth and Gold Bull Resources, you can compare the effects of market volatilities on Ampleforth and Gold Bull 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 Ampleforth with a short position of Gold Bull. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and Gold Bull.

Diversification Opportunities for Ampleforth and Gold Bull

0.01

Correlation Coefficient

Ampleforth  Gold Bull

Significant diversification

The 3 months correlation between Ampleforth and Gold is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Gold Bull Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bull Resources and Ampleforth 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 Ampleforth are associated (or correlated) with Gold Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bull Resources has no effect on the direction of Ampleforth i.e., Ampleforth and Gold Bull go up and down completely randomly.

Pair Corralation between Ampleforth and Gold Bull

Assuming the 90 days trading horizon Ampleforth is expected to generate 0.89 times more return on investment than Gold Bull. However, Ampleforth is 1.12 times less risky than Gold Bull. It trades about 0.12 of its potential returns per unit of risk. Gold Bull Resources is currently generating about -0.01 per unit of risk. If you would invest  97.00  in Ampleforth on September 4, 2024 and sell it today you would earn a total of  37.00  from holding Ampleforth or generate 38.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Ampleforth  vs.  Gold Bull Resources

Ampleforth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gold Bull Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Bull Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Gold Bull is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ampleforth and Gold Bull

The main advantage of trading using opposite Ampleforth and Gold Bull positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth position performs unexpectedly, Gold Bull 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 Gold Bull will offset losses from the drop in Gold Bull's long position.

The idea behind Ampleforth and Gold Bull 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.

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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.