Correlation Between Asante Gold and EnviroLeach Technologies

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

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

Diversification Opportunities for Asante Gold and EnviroLeach Technologies

0.16

Correlation Coefficient

Asante Gold  EnviroLeach Technologies

Average diversification

The 3 months correlation between Asante and EnviroLeach is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Asante Gold and EnviroLeach Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnviroLeach Technologies and Asante Gold 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 Asante Gold are associated (or correlated) with EnviroLeach Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnviroLeach Technologies has no effect on the direction of Asante Gold i.e., Asante Gold and EnviroLeach Technologies go up and down completely randomly.

Pair Corralation between Asante Gold and EnviroLeach Technologies

Assuming the 90 days horizon Asante Gold is expected to under-perform the EnviroLeach Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Asante Gold is 7.4 times less risky than EnviroLeach Technologies. The pink sheet trades about -0.04 of its potential returns per unit of risk. The EnviroLeach Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.00  in EnviroLeach Technologies on September 5, 2024 and sell it today you would lose (0.40) from holding EnviroLeach Technologies or give up 40.0% of portfolio value over 90 days.

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

Asante Gold  vs.  EnviroLeach Technologies

Asante Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asante Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

EnviroLeach Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EnviroLeach Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, EnviroLeach Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asante Gold and EnviroLeach Technologies

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

The idea behind Asante Gold and EnviroLeach Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.