Correlation Between Advantage Solutions and K92 Mining

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Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and K92 Mining 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 Advantage Solutions and K92 Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Solutions and K92 Mining, you can compare the effects of market volatilities on Advantage Solutions and K92 Mining 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 Advantage Solutions with a short position of K92 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and K92 Mining.

Diversification Opportunities for Advantage Solutions and K92 Mining

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Advantage and K92 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and K92 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K92 Mining and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with K92 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K92 Mining has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and K92 Mining go up and down completely randomly.

Pair Corralation between Advantage Solutions and K92 Mining

Assuming the 90 days horizon Advantage Solutions is expected to generate 7.32 times more return on investment than K92 Mining. However, Advantage Solutions is 7.32 times more volatile than K92 Mining. It trades about 0.06 of its potential returns per unit of risk. K92 Mining is currently generating about 0.07 per unit of risk. If you would invest  11.00  in Advantage Solutions on September 4, 2024 and sell it today you would lose (9.00) from holding Advantage Solutions or give up 81.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy78.54%
ValuesDaily Returns

Advantage Solutions  vs.  K92 Mining

 Performance 
       Timeline  
Advantage Solutions 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.
K92 Mining 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in K92 Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, K92 Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Advantage Solutions and K92 Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advantage Solutions and K92 Mining

The main advantage of trading using opposite Advantage Solutions and K92 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, K92 Mining 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 K92 Mining will offset losses from the drop in K92 Mining's long position.
The idea behind Advantage Solutions and K92 Mining 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 Stocks Directory module to find actively traded stocks across global markets.

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