Correlation Between Kinross Gold and Fremont Gold

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

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

Diversification Opportunities for Kinross Gold and Fremont Gold

-0.2

Correlation Coefficient

Kinross Gold  Fremont Gold

Good diversification

The 3 months correlation between Kinross and Fremont is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold and Kinross 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 Kinross Gold are associated (or correlated) with Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Kinross Gold i.e., Kinross Gold and Fremont Gold go up and down completely randomly.

Pair Corralation between Kinross Gold and Fremont Gold

Considering the 90-day investment horizon Kinross Gold is expected to generate 4.35 times less return on investment than Fremont Gold. But when comparing it to its historical volatility, Kinross Gold is 6.21 times less risky than Fremont Gold. It trades about 0.18 of its potential returns per unit of risk. Fremont Gold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7.46  in Fremont Gold on December 21, 2024 and sell it today you would earn a total of  1.84  from holding Fremont Gold or generate 24.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

Kinross Gold  vs.  Fremont Gold

Kinross Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Kinross Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fremont Gold

Risk-Adjusted Performance

OK

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Fremont Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinross Gold and Fremont Gold

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

The idea behind Kinross Gold and Fremont Gold 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.