Correlation Between Roscan Gold and Northern Superior

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

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

Diversification Opportunities for Roscan Gold and Northern Superior

0.58

Correlation Coefficient

Roscan Gold  Northern Superior

Very weak diversification

The 3 months correlation between Roscan and Northern is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Roscan Gold Corp and Northern Superior Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Superior and Roscan 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 Roscan Gold Corp are associated (or correlated) with Northern Superior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Superior has no effect on the direction of Roscan Gold i.e., Roscan Gold and Northern Superior go up and down completely randomly.

Pair Corralation between Roscan Gold and Northern Superior

Assuming the 90 days horizon Roscan Gold Corp is expected to under-perform the Northern Superior. In addition to that, Roscan Gold is 1.74 times more volatile than Northern Superior Resources. It trades about -0.11 of its total potential returns per unit of risk. Northern Superior Resources is currently generating about 0.01 per unit of volatility. If you would invest  48.00  in Northern Superior Resources on October 1, 2024 and sell it today you would earn a total of  0.00  from holding Northern Superior Resources or generate 0.0% return on investment over 90 days.

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

Roscan Gold Corp  vs.  Northern Superior Resources

Roscan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roscan Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Northern Superior

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Superior Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Northern Superior is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Roscan Gold and Northern Superior

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

The idea behind Roscan Gold Corp and Northern Superior 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 Global Correlations module to find global opportunities by holding instruments from different markets.