Correlation Between Klondike Gold and Monarca Minerals

Can any of the company-specific risk be diversified away by investing in both Klondike Gold and Monarca 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 Klondike Gold and Monarca Minerals 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 Monarca Minerals, you can compare the effects of market volatilities on Klondike Gold and Monarca 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 Klondike Gold with a short position of Monarca Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Gold and Monarca Minerals.

Diversification Opportunities for Klondike Gold and Monarca Minerals

0.0

Correlation Coefficient

Klondike Gold  Monarca Minerals

Pay attention - limited upside

The 3 months correlation between Klondike and Monarca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Gold Corp and Monarca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarca Minerals 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 Monarca Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarca Minerals has no effect on the direction of Klondike Gold i.e., Klondike Gold and Monarca Minerals go up and down completely randomly.

Pair Corralation between Klondike Gold and Monarca Minerals

Given the investment horizon of 90 days Klondike Gold is expected to generate 10.23 times less return on investment than Monarca Minerals. But when comparing it to its historical volatility, Klondike Gold Corp is 3.15 times less risky than Monarca Minerals. It trades about 0.03 of its potential returns per unit of risk. Monarca Minerals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Monarca Minerals on October 11, 2024 and sell it today you would lose (1.00) from holding Monarca Minerals or give up 50.0% of portfolio value over 90 days.

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

Klondike Gold Corp  vs.  Monarca Minerals

Klondike Gold Corp

Risk-Adjusted Performance

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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.

Monarca Minerals

Risk-Adjusted Performance

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Very Weak

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

Pair Trading with Klondike Gold and Monarca Minerals

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

The idea behind Klondike Gold Corp and Monarca Minerals 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.