Correlation Between K2 Gold and Sarama Resource
Can any of the company-specific risk be diversified away by investing in both K2 Gold and Sarama Resource 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 K2 Gold and Sarama Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Gold and Sarama Resource, you can compare the effects of market volatilities on K2 Gold and Sarama Resource 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 K2 Gold with a short position of Sarama Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Gold and Sarama Resource.
Diversification Opportunities for K2 Gold and Sarama Resource
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KTO and Sarama is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding K2 Gold and Sarama Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarama Resource and K2 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 K2 Gold are associated (or correlated) with Sarama Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarama Resource has no effect on the direction of K2 Gold i.e., K2 Gold and Sarama Resource go up and down completely randomly.
Pair Corralation between K2 Gold and Sarama Resource
Assuming the 90 days horizon K2 Gold is expected to generate 0.74 times more return on investment than Sarama Resource. However, K2 Gold is 1.34 times less risky than Sarama Resource. It trades about 0.03 of its potential returns per unit of risk. Sarama Resource is currently generating about 0.02 per unit of risk. If you would invest 16.00 in K2 Gold on September 1, 2024 and sell it today you would lose (2.00) from holding K2 Gold or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Gold vs. Sarama Resource
Performance |
| Timeline |
| K2 Gold |
| Sarama Resource |
K2 Gold and Sarama Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Gold and Sarama Resource
The main advantage of trading using opposite K2 Gold and Sarama Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Gold position performs unexpectedly, Sarama Resource 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 Sarama Resource will offset losses from the drop in Sarama Resource's long position.| K2 Gold vs. First Majestic Silver | K2 Gold vs. Ivanhoe Energy | K2 Gold vs. Orezone Gold Corp | K2 Gold vs. Faraday Copper Corp |
| Sarama Resource vs. First Majestic Silver | Sarama Resource vs. Ivanhoe Energy | Sarama Resource vs. Orezone Gold Corp | Sarama Resource vs. Faraday Copper 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |