Correlation Between Seven West and Kalgoorlie Gold
Can any of the company-specific risk be diversified away by investing in both Seven West and Kalgoorlie Gold 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 Seven West and Kalgoorlie Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Kalgoorlie Gold Mining, you can compare the effects of market volatilities on Seven West and Kalgoorlie Gold 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 Seven West with a short position of Kalgoorlie Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Kalgoorlie Gold.
Diversification Opportunities for Seven West and Kalgoorlie Gold
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seven and Kalgoorlie is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Kalgoorlie Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalgoorlie Gold Mining and Seven West 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 Seven West Media are associated (or correlated) with Kalgoorlie Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalgoorlie Gold Mining has no effect on the direction of Seven West i.e., Seven West and Kalgoorlie Gold go up and down completely randomly.
Pair Corralation between Seven West and Kalgoorlie Gold
Assuming the 90 days trading horizon Seven West Media is expected to generate 0.83 times more return on investment than Kalgoorlie Gold. However, Seven West Media is 1.2 times less risky than Kalgoorlie Gold. It trades about 0.08 of its potential returns per unit of risk. Kalgoorlie Gold Mining is currently generating about -0.11 per unit of risk. If you would invest 16.00 in Seven West Media on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Seven West Media or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.36% |
| Values | Daily Returns |
Seven West Media vs. Kalgoorlie Gold Mining
Performance |
| Timeline |
| Seven West Media |
| Kalgoorlie Gold Mining |
Seven West and Kalgoorlie Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Kalgoorlie Gold
The main advantage of trading using opposite Seven West and Kalgoorlie Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, Kalgoorlie Gold 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 Kalgoorlie Gold will offset losses from the drop in Kalgoorlie Gold's long position.| Seven West vs. Fisher Paykel Healthcare | Seven West vs. Insurance Australia Group | Seven West vs. Retail Food Group | Seven West vs. Oceania Healthcare |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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