Correlation Between Kinross Gold and Platinum Group

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

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

Diversification Opportunities for Kinross Gold and Platinum Group

0.77

Correlation Coefficient

Kinross Gold  Platinum Group

Poor diversification

The 3 months correlation between Kinross and Platinum is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals 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 Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Kinross Gold i.e., Kinross Gold and Platinum Group go up and down completely randomly.

Pair Corralation between Kinross Gold and Platinum Group

Considering the 90-day investment horizon Kinross Gold is expected to generate 0.56 times more return on investment than Platinum Group. However, Kinross Gold is 1.78 times less risky than Platinum Group. It trades about 0.08 of its potential returns per unit of risk. Platinum Group Metals is currently generating about 0.01 per unit of risk. If you would invest  473.00  in Kinross Gold on October 3, 2024 and sell it today you would earn a total of  454.00  from holding Kinross Gold or generate 95.98% return on investment over 90 days.

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

Kinross Gold  vs.  Platinum Group Metals

Kinross Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kinross Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Kinross Gold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Platinum Group Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Platinum Group Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Kinross Gold and Platinum Group

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

The idea behind Kinross Gold and Platinum Group 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.