Correlation Between K92 Mining and Torex Gold

Can any of the company-specific risk be diversified away by investing in both K92 Mining and Torex 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 K92 Mining and Torex Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K92 Mining and Torex Gold Resources, you can compare the effects of market volatilities on K92 Mining and Torex 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 K92 Mining with a short position of Torex Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of K92 Mining and Torex Gold.

Diversification Opportunities for K92 Mining and Torex Gold

0.82

Correlation Coefficient

K92 Mining  Torex Gold

Very poor diversification

The 3 months correlation between K92 and Torex is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding K92 Mining and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources and K92 Mining 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 K92 Mining are associated (or correlated) with Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of K92 Mining i.e., K92 Mining and Torex Gold go up and down completely randomly.

Pair Corralation between K92 Mining and Torex Gold

Assuming the 90 days horizon K92 Mining is expected to generate 0.96 times more return on investment than Torex Gold. However, K92 Mining is 1.04 times less risky than Torex Gold. It trades about 0.07 of its potential returns per unit of risk. Torex Gold Resources is currently generating about 0.03 per unit of risk. If you would invest  601.00  in K92 Mining on September 14, 2024 and sell it today you would earn a total of  69.00  from holding K92 Mining or generate 11.48% return on investment over 90 days.

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

K92 Mining  vs.  Torex Gold Resources

K92 Mining

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in K92 Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, K92 Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Torex Gold Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Torex Gold is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with K92 Mining and Torex Gold

The main advantage of trading using opposite K92 Mining and Torex Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K92 Mining position performs unexpectedly, Torex 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 Torex Gold will offset losses from the drop in Torex Gold's long position.

The idea behind K92 Mining and Torex Gold Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.