Correlation Between Eminent Gold and Aston Minerals

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

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

Diversification Opportunities for Eminent Gold and Aston Minerals

0.31

Correlation Coefficient

Eminent Gold  Aston Minerals

Weak diversification

The 3 months correlation between Eminent and Aston is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eminent Gold Corp and Aston Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Minerals and Eminent 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 Eminent Gold Corp are associated (or correlated) with Aston Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Minerals has no effect on the direction of Eminent Gold i.e., Eminent Gold and Aston Minerals go up and down completely randomly.

Pair Corralation between Eminent Gold and Aston Minerals

Assuming the 90 days horizon Eminent Gold is expected to generate 21.17 times less return on investment than Aston Minerals. But when comparing it to its historical volatility, Eminent Gold Corp is 12.28 times less risky than Aston Minerals. It trades about 0.06 of its potential returns per unit of risk. Aston Minerals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Aston Minerals on September 12, 2024 and sell it today you would lose (0.75) from holding Aston Minerals or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Eminent Gold Corp  vs.  Aston Minerals

Eminent Gold Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eminent Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Eminent Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Aston Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aston Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aston Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eminent Gold and Aston Minerals

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

The idea behind Eminent Gold Corp and Aston Minerals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.