Correlation Between K2 Gold and ValOre Metals
Can any of the company-specific risk be diversified away by investing in both K2 Gold and ValOre Metals 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 ValOre Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Gold and ValOre Metals Corp, you can compare the effects of market volatilities on K2 Gold and ValOre Metals 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 ValOre Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Gold and ValOre Metals.
Diversification Opportunities for K2 Gold and ValOre Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KTO and ValOre is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding K2 Gold and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp 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 ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of K2 Gold i.e., K2 Gold and ValOre Metals go up and down completely randomly.
Pair Corralation between K2 Gold and ValOre Metals
Assuming the 90 days horizon K2 Gold is expected to generate 2.11 times less return on investment than ValOre Metals. But when comparing it to its historical volatility, K2 Gold is 1.22 times less risky than ValOre Metals. It trades about 0.03 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7.00 in ValOre Metals Corp on August 24, 2024 and sell it today you would earn a total of 1.00 from holding ValOre Metals Corp or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Gold vs. ValOre Metals Corp
Performance |
| Timeline |
| K2 Gold |
| ValOre Metals Corp |
K2 Gold and ValOre Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Gold and ValOre Metals
The main advantage of trading using opposite K2 Gold and ValOre Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Gold position performs unexpectedly, ValOre Metals 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 ValOre Metals will offset losses from the drop in ValOre Metals' long position.The idea behind K2 Gold and ValOre Metals Corp 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.| ValOre Metals vs. ALX Uranium Corp | ValOre Metals vs. Forum Energy Metals | ValOre Metals vs. K2 Gold | ValOre Metals vs. Blue Sky Uranium |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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