Correlation Between AERGO and Adventure Gold

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Can any of the company-specific risk be diversified away by investing in both AERGO and Adventure Gold 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 AERGO and Adventure Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AERGO and Adventure Gold, you can compare the effects of market volatilities on AERGO and Adventure Gold 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 AERGO with a short position of Adventure Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AERGO and Adventure Gold.

Diversification Opportunities for AERGO and Adventure Gold

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between AERGO and Adventure is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding AERGO and Adventure Gold in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Adventure Gold and AERGO 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 AERGO are associated (or correlated) with Adventure Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adventure Gold has no effect on the direction of AERGO i.e., AERGO and Adventure Gold go up and down completely randomly.

Pair Corralation between AERGO and Adventure Gold

Assuming the 90 days trading horizon AERGO is expected to generate 0.74 times more return on investment than Adventure Gold. However, AERGO is 1.35 times less risky than Adventure Gold. It trades about -0.03 of its potential returns per unit of risk. Adventure Gold is currently generating about -0.07 per unit of risk. If you would invest  30.00  in AERGO on February 15, 2022 and sell it today you would lose (16.00)  from holding AERGO or give up 53.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy97.99%
ValuesDaily Returns

AERGO  vs.  Adventure Gold

 Performance (%) 
      Timeline 
AERGO 
AERGO Performance
0 of 100
Over the last 90 days AERGO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for AERGO investors.

AERGO Price Channel

Adventure Gold 
Adventure Performance
0 of 100
Over the last 90 days Adventure Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's essential indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Adventure Gold investors.

Adventure Price Channel

AERGO and Adventure Gold Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with AERGO and Adventure Gold

The main advantage of trading using opposite AERGO and Adventure Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AERGO position performs unexpectedly, Adventure Gold 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 Adventure Gold will offset losses from the drop in Adventure Gold's long position.
The idea behind AERGO and Adventure Gold 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.
Check out your portfolio center. 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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