Correlation Between K2 Asset and Mantle Minerals

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

By analyzing existing cross correlation between K2 Asset Management and Mantle Minerals Limited, you can compare the effects of market volatilities on K2 Asset and Mantle 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 K2 Asset with a short position of Mantle Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Mantle Minerals.

Diversification Opportunities for K2 Asset and Mantle Minerals

-0.64

Correlation Coefficient

K2 Asset  Mantle Minerals

Excellent diversification

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

Pair Corralation between K2 Asset and Mantle Minerals

Assuming the 90 days trading horizon K2 Asset is expected to generate 2.18 times less return on investment than Mantle Minerals. But when comparing it to its historical volatility, K2 Asset Management is 6.65 times less risky than Mantle Minerals. It trades about 0.2 of its potential returns per unit of risk. Mantle Minerals Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Mantle Minerals Limited on September 15, 2024 and sell it today you would lose (0.10) from holding Mantle Minerals Limited or give up 50.0% of portfolio value over 90 days.

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

K2 Asset Management  vs.  Mantle Minerals Limited

K2 Asset Management

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Asset Management are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, K2 Asset unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mantle Minerals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mantle Minerals Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Mantle Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with K2 Asset and Mantle Minerals

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

The idea behind K2 Asset Management and Mantle Minerals Limited 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.