Correlation Between Search Minerals and Kraken Energy
Can any of the company-specific risk be diversified away by investing in both Search Minerals and Kraken Energy 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 Search Minerals and Kraken Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Search Minerals and Kraken Energy Corp, you can compare the effects of market volatilities on Search Minerals and Kraken Energy 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 Search Minerals with a short position of Kraken Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Search Minerals and Kraken Energy.
Diversification Opportunities for Search Minerals and Kraken Energy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Search and Kraken is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Search Minerals and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Search Minerals 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 Search Minerals are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Search Minerals i.e., Search Minerals and Kraken Energy go up and down completely randomly.
Pair Corralation between Search Minerals and Kraken Energy
Assuming the 90 days horizon Search Minerals is expected to generate 7.77 times more return on investment than Kraken Energy. However, Search Minerals is 7.77 times more volatile than Kraken Energy Corp. It trades about 0.12 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.03 per unit of risk. If you would invest 2.00 in Search Minerals on September 1, 2024 and sell it today you would lose (0.80) from holding Search Minerals or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Search Minerals vs. Kraken Energy Corp
Performance |
| Timeline |
| Search Minerals |
| Kraken Energy Corp |
Search Minerals and Kraken Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Search Minerals and Kraken Energy
The main advantage of trading using opposite Search Minerals and Kraken Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Search Minerals position performs unexpectedly, Kraken Energy 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 Kraken Energy will offset losses from the drop in Kraken Energy's long position.| Search Minerals vs. Sassy Resources | Search Minerals vs. Aldebaran Resources | Search Minerals vs. Tamino Minerals | Search Minerals vs. Myriad Uranium Corp |
| Kraken Energy vs. Avarone Metals | Kraken Energy vs. Adriatic Metals PLC | Kraken Energy vs. Aurelia Metals Limited | Kraken Energy vs. Huntsman Exploration |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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