Correlation Between Klondike Gold and Gold79 Mines

Can any of the company-specific risk be diversified away by investing in both Klondike Gold and Gold79 Mines 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 Klondike Gold and Gold79 Mines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Klondike Gold Corp and Gold79 Mines, you can compare the effects of market volatilities on Klondike Gold and Gold79 Mines 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 Klondike Gold with a short position of Gold79 Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Gold and Gold79 Mines.

Diversification Opportunities for Klondike Gold and Gold79 Mines

0.37

Correlation Coefficient

Klondike Gold  Gold79 Mines

Weak diversification

The 3 months correlation between Klondike and Gold79 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Gold Corp and Gold79 Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold79 Mines and Klondike 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 Klondike Gold Corp are associated (or correlated) with Gold79 Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold79 Mines has no effect on the direction of Klondike Gold i.e., Klondike Gold and Gold79 Mines go up and down completely randomly.

Pair Corralation between Klondike Gold and Gold79 Mines

Given the investment horizon of 90 days Klondike Gold Corp is expected to under-perform the Gold79 Mines. In addition to that, Klondike Gold is 1.29 times more volatile than Gold79 Mines. It trades about -0.01 of its total potential returns per unit of risk. Gold79 Mines is currently generating about 0.09 per unit of volatility. If you would invest  28.00  in Gold79 Mines on October 26, 2024 and sell it today you would earn a total of  6.00  from holding Gold79 Mines or generate 21.43% return on investment over 90 days.

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

Klondike Gold Corp  vs.  Gold79 Mines

Klondike Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gold79 Mines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold79 Mines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gold79 Mines showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Klondike Gold and Gold79 Mines

The main advantage of trading using opposite Klondike Gold and Gold79 Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klondike Gold position performs unexpectedly, Gold79 Mines 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 Gold79 Mines will offset losses from the drop in Gold79 Mines' long position.

The idea behind Klondike Gold Corp and Gold79 Mines 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.