Correlation Between Kinross Gold and Paramount Gold

Can any of the company-specific risk be diversified away by investing in both Kinross Gold and Paramount 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 Paramount 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 Paramount Gold Nevada, you can compare the effects of market volatilities on Kinross Gold and Paramount 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 Paramount Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinross Gold and Paramount Gold.

Diversification Opportunities for Kinross Gold and Paramount Gold

0.32

Correlation Coefficient

Kinross Gold  Paramount Gold

Weak diversification

The 3 months correlation between Kinross and Paramount is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and Paramount Gold Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Gold Nevada 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 Paramount Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Gold Nevada has no effect on the direction of Kinross Gold i.e., Kinross Gold and Paramount Gold go up and down completely randomly.

Pair Corralation between Kinross Gold and Paramount Gold

Considering the 90-day investment horizon Kinross Gold is expected to generate 0.87 times more return on investment than Paramount Gold. However, Kinross Gold is 1.16 times less risky than Paramount Gold. It trades about -0.01 of its potential returns per unit of risk. Paramount Gold Nevada is currently generating about -0.03 per unit of risk. If you would invest  992.00  in Kinross Gold on October 8, 2024 and sell it today you would lose (14.00) from holding Kinross Gold or give up 1.41% of portfolio value over 90 days.

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

Kinross Gold  vs.  Paramount Gold Nevada

Kinross Gold

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Paramount Gold Nevada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paramount Gold Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Kinross Gold and Paramount Gold

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

The idea behind Kinross Gold and Paramount Gold Nevada 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.