Correlation Between IGO and Kenorland Minerals

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

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

Diversification Opportunities for IGO and Kenorland Minerals

0.15

Correlation Coefficient

IGO  Kenorland Minerals

Average diversification

The 3 months correlation between IGO and Kenorland is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Kenorland Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenorland Minerals and IGO 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 IGO Limited are associated (or correlated) with Kenorland Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenorland Minerals has no effect on the direction of IGO i.e., IGO and Kenorland Minerals go up and down completely randomly.

Pair Corralation between IGO and Kenorland Minerals

Assuming the 90 days horizon IGO Limited is expected to generate 0.71 times more return on investment than Kenorland Minerals. However, IGO Limited is 1.42 times less risky than Kenorland Minerals. It trades about 0.14 of its potential returns per unit of risk. Kenorland Minerals is currently generating about 0.01 per unit of risk. If you would invest  574.00  in IGO Limited on September 8, 2024 and sell it today you would earn a total of  106.00  from holding IGO Limited or generate 18.47% return on investment over 90 days.

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

IGO Limited  vs.  Kenorland Minerals

IGO Limited

Risk-Adjusted Performance

11 of 100

Good

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

Kenorland Minerals

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kenorland Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Kenorland Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IGO and Kenorland Minerals

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

The idea behind IGO Limited and Kenorland Minerals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..