Correlation Between Kinross Gold and Allied Gold

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

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

Diversification Opportunities for Kinross Gold and Allied Gold

0.76

Correlation Coefficient

Kinross Gold  Allied Gold

Poor diversification

The 3 months correlation between Kinross and Allied is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold Corp and Allied Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Gold and Kinross Gold 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 Kinross Gold Corp are associated (or correlated) with Allied Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Gold has no effect on the direction of Kinross Gold i.e., Kinross Gold and Allied Gold go up and down completely randomly.

Pair Corralation between Kinross Gold and Allied Gold

Given the investment horizon of 90 days Kinross Gold is expected to generate 1.32 times less return on investment than Allied Gold. But when comparing it to its historical volatility, Kinross Gold Corp is 1.48 times less risky than Allied Gold. It trades about 0.19 of its potential returns per unit of risk. Allied Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  339.00  in Allied Gold on December 21, 2024 and sell it today you would earn a total of  144.00  from holding Allied Gold or generate 42.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kinross Gold Corp  vs.  Allied Gold

Kinross Gold Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kinross Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Allied Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Allied Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinross Gold and Allied Gold

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

The idea behind Kinross Gold Corp and Allied 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 CEOs Directory module to screen CEOs from public companies around the world.