Correlation Between Alamos Gold and Kinross Gold

Can any of the company-specific risk be diversified away by investing in both Alamos Gold and Kinross 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 Alamos Gold and Kinross Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alamos Gold and Kinross Gold, you can compare the effects of market volatilities on Alamos Gold and Kinross 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 Alamos Gold with a short position of Kinross Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamos Gold and Kinross Gold.

Diversification Opportunities for Alamos Gold and Kinross Gold

0.58

Correlation Coefficient

Alamos Gold  Kinross Gold

Very weak diversification

The 3 months correlation between Alamos and Kinross is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alamos Gold and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold and Alamos Gold 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 Alamos Gold are associated (or correlated) with Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of Alamos Gold i.e., Alamos Gold and Kinross Gold go up and down completely randomly.

Pair Corralation between Alamos Gold and Kinross Gold

Considering the 90-day investment horizon Alamos Gold is expected to under-perform the Kinross Gold. But the stock apears to be less risky and, when comparing its historical volatility, Alamos Gold is 1.58 times less risky than Kinross Gold. The stock trades about -0.25 of its potential returns per unit of risk. The Kinross Gold is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,070  in Kinross Gold on August 30, 2024 and sell it today you would lose (90.00) from holding Kinross Gold or give up 8.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alamos Gold  vs.  Kinross Gold

Alamos Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alamos Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Alamos Gold is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Kinross Gold

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Kinross Gold may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Alamos Gold and Kinross Gold

The main advantage of trading using opposite Alamos Gold and Kinross Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamos Gold position performs unexpectedly, Kinross 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 Kinross Gold will offset losses from the drop in Kinross Gold's long position.

The idea behind Alamos Gold and Kinross Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.