Correlation Between Blue Sky and K2 Gold

Can any of the company-specific risk be diversified away by investing in both Blue Sky and K2 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 Blue Sky and K2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Sky Uranium and K2 Gold, you can compare the effects of market volatilities on Blue Sky and K2 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 Blue Sky with a short position of K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Sky and K2 Gold.

Diversification Opportunities for Blue Sky and K2 Gold

-0.64

Correlation Coefficient

Blue Sky  K2 Gold

Excellent diversification

The 3 months correlation between Blue and KTO is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blue Sky Uranium and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold and Blue Sky 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 Blue Sky Uranium are associated (or correlated) with K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Blue Sky i.e., Blue Sky and K2 Gold go up and down completely randomly.

Pair Corralation between Blue Sky and K2 Gold

Assuming the 90 days horizon Blue Sky Uranium is expected to under-perform the K2 Gold. In addition to that, Blue Sky is 1.29 times more volatile than K2 Gold. It trades about -0.07 of its total potential returns per unit of risk. K2 Gold is currently generating about 0.15 per unit of volatility. If you would invest  13.00  in K2 Gold on December 26, 2024 and sell it today you would earn a total of  6.00  from holding K2 Gold or generate 46.15% return on investment over 90 days.

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

Blue Sky Uranium  vs.  K2 Gold

Blue Sky Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Sky Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

K2 Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Gold are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, K2 Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Sky and K2 Gold

The main advantage of trading using opposite Blue Sky and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Sky position performs unexpectedly, K2 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 K2 Gold will offset losses from the drop in K2 Gold's long position.

The idea behind Blue Sky Uranium and K2 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.