Correlation Between Empire State and Kalo Gold

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

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

Diversification Opportunities for Empire State and Kalo Gold

-0.85

Correlation Coefficient

Empire State  Kalo Gold

Pay attention - limited upside

The 3 months correlation between Empire and Kalo is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Kalo Gold Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalo Gold Holdings and Empire State 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 Empire State Realty are associated (or correlated) with Kalo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalo Gold Holdings has no effect on the direction of Empire State i.e., Empire State and Kalo Gold go up and down completely randomly.

Pair Corralation between Empire State and Kalo Gold

Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Kalo Gold. But the stock apears to be less risky and, when comparing its historical volatility, Empire State Realty is 5.18 times less risky than Kalo Gold. The stock trades about -0.23 of its potential returns per unit of risk. The Kalo Gold Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Kalo Gold Holdings on December 28, 2024 and sell it today you would earn a total of  2.10  from holding Kalo Gold Holdings or generate 84.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Empire State Realty  vs.  Kalo Gold Holdings

Empire State Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kalo Gold Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kalo Gold Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Kalo Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire State and Kalo Gold

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

The idea behind Empire State Realty and Kalo Gold Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.