Correlation Between Alkane Resources and Newmont Goldcorp

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

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

Diversification Opportunities for Alkane Resources and Newmont Goldcorp

0.54

Correlation Coefficient

Alkane Resources  Newmont Goldcorp

Very weak diversification

The 3 months correlation between Alkane and Newmont is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alkane Resources Limited and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp and Alkane Resources 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 Alkane Resources Limited are associated (or correlated) with Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Alkane Resources i.e., Alkane Resources and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between Alkane Resources and Newmont Goldcorp

Assuming the 90 days horizon Alkane Resources Limited is expected to generate 3.0 times more return on investment than Newmont Goldcorp. However, Alkane Resources is 3.0 times more volatile than Newmont Goldcorp Corp. It trades about 0.11 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.2 per unit of risk. If you would invest  30.00  in Alkane Resources Limited on December 21, 2024 and sell it today you would earn a total of  10.00  from holding Alkane Resources Limited or generate 33.33% return on investment over 90 days.

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

Alkane Resources Limited  vs.  Newmont Goldcorp Corp

Alkane Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alkane Resources Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Alkane Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Newmont Goldcorp Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Newmont Goldcorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkane Resources and Newmont Goldcorp

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

The idea behind Alkane Resources Limited and Newmont Goldcorp 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 Stocks Directory module to find actively traded stocks across global markets.