Correlation Between Kenorland Minerals and Ivanhoe Mines

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

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

Diversification Opportunities for Kenorland Minerals and Ivanhoe Mines

-0.11

Correlation Coefficient

Kenorland Minerals  Ivanhoe Mines

Good diversification

The 3 months correlation between Kenorland and Ivanhoe is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Kenorland Minerals and Ivanhoe Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivanhoe Mines and Kenorland Minerals 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 Kenorland Minerals are associated (or correlated) with Ivanhoe Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivanhoe Mines has no effect on the direction of Kenorland Minerals i.e., Kenorland Minerals and Ivanhoe Mines go up and down completely randomly.

Pair Corralation between Kenorland Minerals and Ivanhoe Mines

Assuming the 90 days horizon Kenorland Minerals is expected to generate 1.3 times more return on investment than Ivanhoe Mines. However, Kenorland Minerals is 1.3 times more volatile than Ivanhoe Mines. It trades about -0.02 of its potential returns per unit of risk. Ivanhoe Mines is currently generating about -0.13 per unit of risk. If you would invest  90.00  in Kenorland Minerals on October 22, 2024 and sell it today you would lose (7.00) from holding Kenorland Minerals or give up 7.78% of portfolio value over 90 days.

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

Kenorland Minerals  vs.  Ivanhoe Mines

Kenorland Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenorland Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Kenorland Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ivanhoe Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivanhoe Mines 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 Kenorland Minerals and Ivanhoe Mines

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

The idea behind Kenorland Minerals and Ivanhoe 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.