Correlation Between Ardea Resources and Rokmaster Resources

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

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

Diversification Opportunities for Ardea Resources and Rokmaster Resources

0.18

Correlation Coefficient

Ardea Resources  Rokmaster Resources

Average diversification

The 3 months correlation between Ardea and Rokmaster is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ardea Resources Limited and Rokmaster Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rokmaster Resources Corp and Ardea 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 Ardea Resources Limited are associated (or correlated) with Rokmaster Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rokmaster Resources Corp has no effect on the direction of Ardea Resources i.e., Ardea Resources and Rokmaster Resources go up and down completely randomly.

Pair Corralation between Ardea Resources and Rokmaster Resources

Assuming the 90 days horizon Ardea Resources Limited is expected to under-perform the Rokmaster Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ardea Resources Limited is 2.39 times less risky than Rokmaster Resources. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Rokmaster Resources Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.20  in Rokmaster Resources Corp on September 13, 2024 and sell it today you would lose (2.60) from holding Rokmaster Resources Corp or give up 61.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ardea Resources Limited  vs.  Rokmaster Resources Corp

Ardea Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardea 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.

Rokmaster Resources Corp

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Rokmaster Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly abnormal basic indicators, Rokmaster Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ardea Resources and Rokmaster Resources

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

The idea behind Ardea Resources Limited and Rokmaster Resources Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.