Correlation Between Banyan Gold and Asante Gold

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

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

Diversification Opportunities for Banyan Gold and Asante Gold

0.45

Correlation Coefficient

Banyan Gold  Asante Gold

Very weak diversification

The 3 months correlation between Banyan and Asante is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Banyan Gold Corp and Asante Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asante Gold and Banyan 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 Banyan Gold Corp are associated (or correlated) with Asante Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asante Gold has no effect on the direction of Banyan Gold i.e., Banyan Gold and Asante Gold go up and down completely randomly.

Pair Corralation between Banyan Gold and Asante Gold

Assuming the 90 days horizon Banyan Gold Corp is expected to generate 1.78 times more return on investment than Asante Gold. However, Banyan Gold is 1.78 times more volatile than Asante Gold. It trades about -0.03 of its potential returns per unit of risk. Asante Gold is currently generating about -0.14 per unit of risk. If you would invest  16.00  in Banyan Gold Corp on September 14, 2024 and sell it today you would lose (2.00) from holding Banyan Gold Corp or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Banyan Gold Corp  vs.  Asante Gold

Banyan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 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.

Pair Trading with Banyan Gold and Asante Gold

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

The idea behind Banyan Gold Corp and Asante Gold 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.