Correlation Between Advance Gold and Advance United

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

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

Diversification Opportunities for Advance Gold and Advance United

1.0

Correlation Coefficient

Advance Gold  Advance United

No risk reduction

The 3 months correlation between Advance and Advance is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Advance Gold Corp and Advance United Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance United Holdings and Advance 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 Advance Gold Corp are associated (or correlated) with Advance United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance United Holdings has no effect on the direction of Advance Gold i.e., Advance Gold and Advance United go up and down completely randomly.

Pair Corralation between Advance Gold and Advance United

If you would invest  2.00  in Advance United Holdings on March 13, 2024 and sell it today you would earn a total of  0.00  from holding Advance United Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.62%
Values	Daily Returns

Advance Gold Corp  vs.  Advance United Holdings

Advance Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advance Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Advance Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Advance United Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advance United Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Advance United is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Advance Gold and Advance United

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

The idea behind Advance Gold Corp and Advance United Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.