Correlation Between Sterling Metals and KWG Resources
Can any of the company-specific risk be diversified away by investing in both Sterling Metals and KWG 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 Sterling Metals and KWG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Metals Corp and KWG Resources, you can compare the effects of market volatilities on Sterling Metals and KWG 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 Sterling Metals with a short position of KWG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Metals and KWG Resources.
Diversification Opportunities for Sterling Metals and KWG Resources
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sterling and KWG is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Metals Corp and KWG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KWG Resources and Sterling Metals 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 Sterling Metals Corp are associated (or correlated) with KWG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KWG Resources has no effect on the direction of Sterling Metals i.e., Sterling Metals and KWG Resources go up and down completely randomly.
Pair Corralation between Sterling Metals and KWG Resources
Assuming the 90 days horizon Sterling Metals Corp is expected to under-perform the KWG Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Sterling Metals Corp is 1.98 times less risky than KWG Resources. The otc stock trades about -0.19 of its potential returns per unit of risk. The KWG Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.80 in KWG Resources on September 1, 2024 and sell it today you would earn a total of 0.25 from holding KWG Resources or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sterling Metals Corp vs. KWG Resources
Performance |
| Timeline |
| Sterling Metals Corp |
| KWG Resources |
Sterling Metals and KWG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Metals and KWG Resources
The main advantage of trading using opposite Sterling Metals and KWG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Metals position performs unexpectedly, KWG 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 KWG Resources will offset losses from the drop in KWG Resources' long position.| Sterling Metals vs. Progressive Planet Solutions | Sterling Metals vs. Durango Resources | Sterling Metals vs. Avarone Metals | Sterling Metals vs. Mundoro Capital |
| KWG Resources vs. South32 Limited | KWG Resources vs. NioCorp Developments Ltd | KWG Resources vs. HUMANA INC | KWG Resources vs. SCOR PK |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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