Correlation Between ROK Resources and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both ROK Resources and Kelt Exploration 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 ROK Resources and Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROK Resources and Kelt Exploration, you can compare the effects of market volatilities on ROK Resources and Kelt Exploration 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 ROK Resources with a short position of Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROK Resources and Kelt Exploration.
Diversification Opportunities for ROK Resources and Kelt Exploration
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ROK and Kelt is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ROK Resources and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration and ROK 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 ROK Resources are associated (or correlated) with Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of ROK Resources i.e., ROK Resources and Kelt Exploration go up and down completely randomly.
Pair Corralation between ROK Resources and Kelt Exploration
Assuming the 90 days horizon ROK Resources is expected to under-perform the Kelt Exploration. In addition to that, ROK Resources is 2.13 times more volatile than Kelt Exploration. It trades about -0.16 of its total potential returns per unit of risk. Kelt Exploration is currently generating about -0.02 per unit of volatility. If you would invest 490.00 in Kelt Exploration on November 3, 2024 and sell it today you would lose (5.00) from holding Kelt Exploration or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
ROK Resources vs. Kelt Exploration
Performance |
| Timeline |
| ROK Resources |
| Kelt Exploration |
ROK Resources and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROK Resources and Kelt Exploration
The main advantage of trading using opposite ROK Resources and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROK Resources position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.| ROK Resources vs. Legacy Education | ROK Resources vs. Apple Inc | ROK Resources vs. Microsoft | ROK Resources vs. NVIDIA |
| Kelt Exploration vs. ROK Resources | Kelt Exploration vs. PetroShale | Kelt Exploration vs. Pieridae Energy Limited | Kelt Exploration vs. Bengal Energy |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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