Correlation Between Collins Foods and Kalgoorlie Gold
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Kalgoorlie 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 Collins Foods and Kalgoorlie Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Kalgoorlie Gold Mining, you can compare the effects of market volatilities on Collins Foods and Kalgoorlie 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 Collins Foods with a short position of Kalgoorlie Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Kalgoorlie Gold.
Diversification Opportunities for Collins Foods and Kalgoorlie Gold
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Kalgoorlie is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Kalgoorlie Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalgoorlie Gold Mining and Collins Foods 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 Collins Foods are associated (or correlated) with Kalgoorlie Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalgoorlie Gold Mining has no effect on the direction of Collins Foods i.e., Collins Foods and Kalgoorlie Gold go up and down completely randomly.
Pair Corralation between Collins Foods and Kalgoorlie Gold
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Kalgoorlie Gold. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 3.8 times less risky than Kalgoorlie Gold. The stock trades about -0.07 of its potential returns per unit of risk. The Kalgoorlie Gold Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Kalgoorlie Gold Mining on November 8, 2024 and sell it today you would lose (0.10) from holding Kalgoorlie Gold Mining or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Kalgoorlie Gold Mining
Performance |
| Timeline |
| Collins Foods |
| Kalgoorlie Gold Mining |
Collins Foods and Kalgoorlie Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Kalgoorlie Gold
The main advantage of trading using opposite Collins Foods and Kalgoorlie Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Kalgoorlie 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 Kalgoorlie Gold will offset losses from the drop in Kalgoorlie Gold's long position.| Collins Foods vs. TPG Telecom | Collins Foods vs. Ainsworth Game Technology | Collins Foods vs. Everest Metals | Collins Foods vs. Dug Technology |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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