Correlation Between Karora Resources and West African
Can any of the company-specific risk be diversified away by investing in both Karora Resources and West African 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 Karora Resources and West African into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karora Resources and West African Resources, you can compare the effects of market volatilities on Karora Resources and West African 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 Karora Resources with a short position of West African. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karora Resources and West African.
Diversification Opportunities for Karora Resources and West African
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Karora and West is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Karora Resources and West African Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West African Resources and Karora Resources 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 Karora Resources are associated (or correlated) with West African. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West African Resources has no effect on the direction of Karora Resources i.e., Karora Resources and West African go up and down completely randomly.
Pair Corralation between Karora Resources and West African
Assuming the 90 days horizon Karora Resources is expected to generate 4.08 times less return on investment than West African. But when comparing it to its historical volatility, Karora Resources is 3.7 times less risky than West African. It trades about 0.05 of its potential returns per unit of risk. West African Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 71.00 in West African Resources on November 2, 2024 and sell it today you would earn a total of 29.00 from holding West African Resources or generate 40.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.65% |
| Values | Daily Returns |
Karora Resources vs. West African Resources
Performance |
| Timeline |
| Karora Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| West African Resources |
Karora Resources and West African Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karora Resources and West African
The main advantage of trading using opposite Karora Resources and West African positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karora Resources position performs unexpectedly, West African 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 West African will offset losses from the drop in West African's long position.| Karora Resources vs. K92 Mining | Karora Resources vs. I 80 Gold Corp | Karora Resources vs. Wesdome Gold Mines | Karora Resources vs. GGX Gold Corp |
| West African vs. Harmony Gold Mining | West African vs. AngloGold Ashanti plc | West African vs. Gold Fields Ltd | West African vs. Kinross Gold |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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