Correlation Between Centerra Gold and Alkane Resources
Can any of the company-specific risk be diversified away by investing in both Centerra Gold and Alkane 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 Centerra Gold and Alkane Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centerra Gold and Alkane Resources Limited, you can compare the effects of market volatilities on Centerra Gold and Alkane 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 Centerra Gold with a short position of Alkane Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centerra Gold and Alkane Resources.
Diversification Opportunities for Centerra Gold and Alkane Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centerra and Alkane is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Centerra Gold and Alkane Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkane Resources and Centerra 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 Centerra Gold are associated (or correlated) with Alkane Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkane Resources has no effect on the direction of Centerra Gold i.e., Centerra Gold and Alkane Resources go up and down completely randomly.
Pair Corralation between Centerra Gold and Alkane Resources
Given the investment horizon of 90 days Centerra Gold is expected to under-perform the Alkane Resources. But the stock apears to be less risky and, when comparing its historical volatility, Centerra Gold is 2.16 times less risky than Alkane Resources. The stock trades about -0.16 of its potential returns per unit of risk. The Alkane Resources Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Alkane Resources Limited on October 20, 2024 and sell it today you would lose (10.00) from holding Alkane Resources Limited or give up 26.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centerra Gold vs. Alkane Resources Limited
Performance |
| Timeline |
| Centerra Gold |
| Alkane Resources |
Centerra Gold and Alkane Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centerra Gold and Alkane Resources
The main advantage of trading using opposite Centerra Gold and Alkane Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centerra Gold position performs unexpectedly, Alkane 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 Alkane Resources will offset losses from the drop in Alkane Resources' long position.| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
| Alkane Resources vs. Arafura Resources | Alkane Resources vs. Great Western Minerals | Alkane Resources vs. Greenland Minerals And | Alkane Resources vs. Ucore Rare Metals |
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 the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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