Correlation Between Kesselrun Resources and Rackla Metals

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

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

Diversification Opportunities for Kesselrun Resources and Rackla Metals

-0.61

Correlation Coefficient

Kesselrun Resources  Rackla Metals

Excellent diversification

The 3 months correlation between Kesselrun and Rackla is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kesselrun Resources and Rackla Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackla Metals and Kesselrun Resources 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 Kesselrun Resources are associated (or correlated) with Rackla Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackla Metals has no effect on the direction of Kesselrun Resources i.e., Kesselrun Resources and Rackla Metals go up and down completely randomly.

Pair Corralation between Kesselrun Resources and Rackla Metals

Assuming the 90 days horizon Kesselrun Resources is expected to under-perform the Rackla Metals. In addition to that, Kesselrun Resources is 1.13 times more volatile than Rackla Metals. It trades about 0.0 of its total potential returns per unit of risk. Rackla Metals is currently generating about 0.06 per unit of volatility. If you would invest  9.00  in Rackla Metals on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Rackla Metals or generate 11.11% return on investment over 90 days.

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

Kesselrun Resources  vs.  Rackla Metals

Kesselrun Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kesselrun Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Kesselrun Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rackla Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rackla Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Rackla Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kesselrun Resources and Rackla Metals

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

The idea behind Kesselrun Resources and Rackla Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.