Correlation Between Nevada King and Ascendant Resources

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

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

Diversification Opportunities for Nevada King and Ascendant Resources

-0.15

Correlation Coefficient

Nevada King  Ascendant Resources

Good diversification

The 3 months correlation between Nevada and Ascendant is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nevada King Gold and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources and Nevada King 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 Nevada King Gold are associated (or correlated) with Ascendant Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendant Resources has no effect on the direction of Nevada King i.e., Nevada King and Ascendant Resources go up and down completely randomly.

Pair Corralation between Nevada King and Ascendant Resources

Assuming the 90 days horizon Nevada King Gold is expected to under-perform the Ascendant Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nevada King Gold is 2.26 times less risky than Ascendant Resources. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Ascendant Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Ascendant Resources on September 12, 2024 and sell it today you would lose (1.00) from holding Ascendant Resources or give up 33.33% of portfolio value over 90 days.

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

Nevada King Gold  vs.  Ascendant Resources

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King 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 technical and fundamental 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.

Ascendant Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascendant Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ascendant Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nevada King and Ascendant Resources

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

The idea behind Nevada King Gold and Ascendant Resources 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.