Correlation Between Klondike Silver and Conquest Resources
Can any of the company-specific risk be diversified away by investing in both Klondike Silver and Conquest 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 Silver and Conquest Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klondike Silver Corp and Conquest Resources, you can compare the effects of market volatilities on Klondike Silver and Conquest 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 Silver with a short position of Conquest Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Silver and Conquest Resources.
Diversification Opportunities for Klondike Silver and Conquest Resources
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Klondike and Conquest is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Conquest Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquest Resources and Klondike Silver 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 Silver Corp are associated (or correlated) with Conquest Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquest Resources has no effect on the direction of Klondike Silver i.e., Klondike Silver and Conquest Resources go up and down completely randomly.
Pair Corralation between Klondike Silver and Conquest Resources
Given the investment horizon of 90 days Klondike Silver Corp is expected to under-perform the Conquest Resources. But the stock apears to be less risky and, when comparing its historical volatility, Klondike Silver Corp is 1.8 times less risky than Conquest Resources. The stock trades about -0.16 of its potential returns per unit of risk. The Conquest Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Conquest Resources on August 29, 2024 and sell it today you would lose (0.50) from holding Conquest Resources or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klondike Silver Corp vs. Conquest Resources
Performance |
| Timeline |
| Klondike Silver Corp |
| Conquest Resources |
Klondike Silver and Conquest Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klondike Silver and Conquest Resources
The main advantage of trading using opposite Klondike Silver and Conquest Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Silver position performs unexpectedly, Conquest 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 Conquest Resources will offset losses from the drop in Conquest Resources' long position.The idea behind Klondike Silver Corp and Conquest Resources 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.| Conquest Resources vs. CVS HEALTH CDR | Conquest Resources vs. Nova Leap Health | Conquest Resources vs. Birchtech Corp | Conquest Resources vs. WELL Health Technologies |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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