Correlation Between Klondike Gold and GFG Resources
Can any of the company-specific risk be diversified away by investing in both Klondike Gold and GFG 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 Klondike Gold and GFG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klondike Gold Corp and GFG Resources, you can compare the effects of market volatilities on Klondike Gold and GFG 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 Klondike Gold with a short position of GFG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Gold and GFG Resources.
Diversification Opportunities for Klondike Gold and GFG Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Klondike and GFG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Gold Corp and GFG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFG Resources and Klondike 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 Klondike Gold Corp are associated (or correlated) with GFG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFG Resources has no effect on the direction of Klondike Gold i.e., Klondike Gold and GFG Resources go up and down completely randomly.
Pair Corralation between Klondike Gold and GFG Resources
Assuming the 90 days horizon Klondike Gold Corp is expected to generate 1.98 times more return on investment than GFG Resources. However, Klondike Gold is 1.98 times more volatile than GFG Resources. It trades about -0.12 of its potential returns per unit of risk. GFG Resources is currently generating about -0.27 per unit of risk. If you would invest 6.00 in Klondike Gold Corp on September 1, 2024 and sell it today you would lose (1.35) from holding Klondike Gold Corp or give up 22.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Klondike Gold Corp vs. GFG Resources
Performance |
| Timeline |
| Klondike Gold Corp |
| GFG Resources |
Klondike Gold and GFG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klondike Gold and GFG Resources
The main advantage of trading using opposite Klondike Gold and GFG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Gold position performs unexpectedly, GFG 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 GFG Resources will offset losses from the drop in GFG Resources' long position.| Klondike Gold vs. Aurion Resources | Klondike Gold vs. Rio2 Limited | Klondike Gold vs. Palamina Corp | Klondike Gold vs. BTU Metals Corp |
| GFG Resources vs. Aurion Resources | GFG Resources vs. Rio2 Limited | GFG Resources vs. Palamina Corp | GFG Resources vs. BTU Metals Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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