Correlation Between Sky Metals and K2 Asset
Can any of the company-specific risk be diversified away by investing in both Sky Metals and K2 Asset 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 Sky Metals and K2 Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and K2 Asset Management, you can compare the effects of market volatilities on Sky Metals and K2 Asset 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 Sky Metals with a short position of K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and K2 Asset.
Diversification Opportunities for Sky Metals and K2 Asset
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sky and KAM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management and Sky 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 Sky Metals are associated (or correlated) with K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Sky Metals i.e., Sky Metals and K2 Asset go up and down completely randomly.
Pair Corralation between Sky Metals and K2 Asset
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.59 times less return on investment than K2 Asset. In addition to that, Sky Metals is 1.06 times more volatile than K2 Asset Management. It trades about 0.03 of its total potential returns per unit of risk. K2 Asset Management is currently generating about 0.05 per unit of volatility. If you would invest 3.80 in K2 Asset Management on September 13, 2024 and sell it today you would earn a total of 3.90 from holding K2 Asset Management or generate 102.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.79% |
| Values | Daily Returns |
Sky Metals vs. K2 Asset Management
Performance |
| Timeline |
| Sky Metals |
| K2 Asset Management |
Sky Metals and K2 Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and K2 Asset
The main advantage of trading using opposite Sky Metals and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.| Sky Metals vs. Champion Iron | Sky Metals vs. Australian Strategic Materials | Sky Metals vs. Ras Technology Holdings | Sky Metals vs. Red Hill Iron |
| K2 Asset vs. Sky Metals | K2 Asset vs. Carnegie Clean Energy | K2 Asset vs. Hutchison Telecommunications | K2 Asset vs. MetalsGrove Mining |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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