Correlation Between KWG Resources and Metals X
Can any of the company-specific risk be diversified away by investing in both KWG Resources and Metals X 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 KWG Resources and Metals X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KWG Resources and Metals X Limited, you can compare the effects of market volatilities on KWG Resources and Metals X 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 KWG Resources with a short position of Metals X. Check out your portfolio center. Please also check ongoing floating volatility patterns of KWG Resources and Metals X.
Diversification Opportunities for KWG Resources and Metals X
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KWG and Metals is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KWG Resources and Metals X Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals X Limited and KWG 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 KWG Resources are associated (or correlated) with Metals X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals X Limited has no effect on the direction of KWG Resources i.e., KWG Resources and Metals X go up and down completely randomly.
Pair Corralation between KWG Resources and Metals X
Assuming the 90 days horizon KWG Resources is expected to generate 5.24 times more return on investment than Metals X. However, KWG Resources is 5.24 times more volatile than Metals X Limited. It trades about 0.07 of its potential returns per unit of risk. Metals X Limited is currently generating about 0.04 per unit of risk. If you would invest 3.00 in KWG Resources on August 29, 2024 and sell it today you would lose (1.95) from holding KWG Resources or give up 65.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KWG Resources vs. Metals X Limited
Performance |
| Timeline |
| KWG Resources |
| Metals X Limited |
KWG Resources and Metals X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KWG Resources and Metals X
The main advantage of trading using opposite KWG Resources and Metals X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KWG Resources position performs unexpectedly, Metals X 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 Metals X will offset losses from the drop in Metals X's long position.| KWG Resources vs. Ascendant Resources | KWG Resources vs. Cantex Mine Development | KWG Resources vs. Amarc Resources | KWG Resources vs. Sterling 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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