Correlation Between Highway 50 and K2 Gold
Can any of the company-specific risk be diversified away by investing in both Highway 50 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 Highway 50 and K2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway 50 Gold and K2 Gold, you can compare the effects of market volatilities on Highway 50 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 Highway 50 with a short position of K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway 50 and K2 Gold.
Diversification Opportunities for Highway 50 and K2 Gold
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and KTO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Highway 50 Gold and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold and Highway 50 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 Highway 50 Gold 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 Highway 50 i.e., Highway 50 and K2 Gold go up and down completely randomly.
Pair Corralation between Highway 50 and K2 Gold
Assuming the 90 days horizon Highway 50 Gold is expected to generate 5.08 times more return on investment than K2 Gold. However, Highway 50 is 5.08 times more volatile than K2 Gold. It trades about 0.08 of its potential returns per unit of risk. K2 Gold is currently generating about 0.1 per unit of risk. If you would invest 32.00 in Highway 50 Gold on December 3, 2024 and sell it today you would earn a total of 6.00 from holding Highway 50 Gold or generate 18.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Highway 50 Gold vs. K2 Gold
Performance |
Timeline |
Highway 50 Gold |
K2 Gold |
Highway 50 and K2 Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Highway 50 and K2 Gold
The main advantage of trading using opposite Highway 50 and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway 50 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.Highway 50 vs. G6 Materials Corp | Highway 50 vs. Eskay Mining Corp | Highway 50 vs. Falcon Energy Materials | Highway 50 vs. Adex Mining |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Equity Valuation Check real value of public entities based on technical and fundamental data |