Correlation Between Anson Resources and Premium Nickel

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

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

Diversification Opportunities for Anson Resources and Premium Nickel

0.74

Correlation Coefficient

Anson Resources  Premium Nickel

Poor diversification

The 3 months correlation between Anson and Premium is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Anson Resources Limited and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel Resources and Anson Resources 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 Anson Resources Limited are associated (or correlated) with Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Anson Resources i.e., Anson Resources and Premium Nickel go up and down completely randomly.

Pair Corralation between Anson Resources and Premium Nickel

Assuming the 90 days horizon Anson Resources Limited is expected to generate 2.75 times more return on investment than Premium Nickel. However, Anson Resources is 2.75 times more volatile than Premium Nickel Resources. It trades about -0.02 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.22 per unit of risk. If you would invest  6.00  in Anson Resources Limited on September 30, 2024 and sell it today you would lose (2.40) from holding Anson Resources Limited or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.97%
Values	Daily Returns

Anson Resources Limited  vs.  Premium Nickel Resources

Anson Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anson Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Premium Nickel Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Premium Nickel Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Anson Resources and Premium Nickel

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

The idea behind Anson Resources Limited and Premium Nickel 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.