Correlation Between Red Pine and Ascot Resources

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

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

Diversification Opportunities for Red Pine and Ascot Resources

-0.01

Correlation Coefficient

Red Pine  Ascot Resources

Good diversification

The 3 months correlation between Red and Ascot is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources and Red Pine 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 Red Pine Exploration are associated (or correlated) with Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Red Pine i.e., Red Pine and Ascot Resources go up and down completely randomly.

Pair Corralation between Red Pine and Ascot Resources

Assuming the 90 days horizon Red Pine Exploration is expected to under-perform the Ascot Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Red Pine Exploration is 1.72 times less risky than Ascot Resources. The otc stock trades about -0.05 of its potential returns per unit of risk. The Ascot Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Ascot Resources on September 23, 2024 and sell it today you would lose (1.00) from holding Ascot Resources or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Red Pine Exploration  vs.  Ascot Resources

Red Pine Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Pine Exploration 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.

Ascot Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ascot Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ascot Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Red Pine and Ascot Resources

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

The idea behind Red Pine Exploration and Ascot 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.