Correlation Between Keg Royalties and Supremex

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

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

Diversification Opportunities for Keg Royalties and Supremex

-0.35

Correlation Coefficient

Keg Royalties  Supremex

Very good diversification

The 3 months correlation between Keg and Supremex is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Keg Royalties and Supremex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supremex and Keg Royalties 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 The Keg Royalties are associated (or correlated) with Supremex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supremex has no effect on the direction of Keg Royalties i.e., Keg Royalties and Supremex go up and down completely randomly.

Pair Corralation between Keg Royalties and Supremex

Assuming the 90 days trading horizon The Keg Royalties is expected to under-perform the Supremex. But the stock apears to be less risky and, when comparing its historical volatility, The Keg Royalties is 2.28 times less risky than Supremex. The stock trades about -0.1 of its potential returns per unit of risk. The Supremex is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Supremex on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Supremex or generate 11.48% return on investment over 90 days.

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

The Keg Royalties  vs.  Supremex

Keg Royalties

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Keg Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Supremex

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Supremex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Supremex displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Keg Royalties and Supremex

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

The idea behind The Keg Royalties and Supremex 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.