Correlation Between Austral Gold and Kodiak Copper

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

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

Diversification Opportunities for Austral Gold and Kodiak Copper

0.35

Correlation Coefficient

Austral Gold  Kodiak Copper

Weak diversification

The 3 months correlation between Austral and Kodiak is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and Kodiak Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Copper Corp and Austral 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 Austral Gold Limited are associated (or correlated) with Kodiak Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Copper Corp has no effect on the direction of Austral Gold i.e., Austral Gold and Kodiak Copper go up and down completely randomly.

Pair Corralation between Austral Gold and Kodiak Copper

Assuming the 90 days horizon Austral Gold Limited is expected to generate 9.45 times more return on investment than Kodiak Copper. However, Austral Gold is 9.45 times more volatile than Kodiak Copper Corp. It trades about 0.15 of its potential returns per unit of risk. Kodiak Copper Corp is currently generating about -0.1 per unit of risk. If you would invest  1.07  in Austral Gold Limited on September 13, 2024 and sell it today you would earn a total of  0.43  from holding Austral Gold Limited or generate 40.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Austral Gold Limited  vs.  Kodiak Copper Corp

Austral Gold Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Austral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Kodiak Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kodiak Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Austral Gold and Kodiak Copper

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

The idea behind Austral Gold Limited and Kodiak Copper Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.