Correlation Between Arizona Sonoran and Stellar AfricaGold

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

By analyzing existing cross correlation between Arizona Sonoran Copper and Stellar AfricaGold, you can compare the effects of market volatilities on Arizona Sonoran and Stellar AfricaGold 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 Arizona Sonoran with a short position of Stellar AfricaGold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Sonoran and Stellar AfricaGold.

Diversification Opportunities for Arizona Sonoran and Stellar AfricaGold

-0.28

Correlation Coefficient

Arizona Sonoran  Stellar AfricaGold

Very good diversification

The 3 months correlation between Arizona and Stellar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Sonoran Copper and Stellar AfricaGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellar AfricaGold and Arizona Sonoran 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 Arizona Sonoran Copper are associated (or correlated) with Stellar AfricaGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellar AfricaGold has no effect on the direction of Arizona Sonoran i.e., Arizona Sonoran and Stellar AfricaGold go up and down completely randomly.

Pair Corralation between Arizona Sonoran and Stellar AfricaGold

Assuming the 90 days trading horizon Arizona Sonoran Copper is expected to under-perform the Stellar AfricaGold. But the stock apears to be less risky and, when comparing its historical volatility, Arizona Sonoran Copper is 5.79 times less risky than Stellar AfricaGold. The stock trades about -0.08 of its potential returns per unit of risk. The Stellar AfricaGold is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Stellar AfricaGold on October 1, 2024 and sell it today you would lose (2.00) from holding Stellar AfricaGold or give up 25.0% of portfolio value over 90 days.

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

Arizona Sonoran Copper  vs.  Stellar AfricaGold

Arizona Sonoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arizona Sonoran Copper has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Stellar AfricaGold

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar AfricaGold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Stellar AfricaGold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arizona Sonoran and Stellar AfricaGold

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

The idea behind Arizona Sonoran Copper and Stellar AfricaGold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.