Correlation Between Kore Mining and Lumina Gold

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

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

Diversification Opportunities for Kore Mining and Lumina Gold

0.6

Correlation Coefficient

Kore Mining  Lumina Gold

Poor diversification

The 3 months correlation between Kore and Lumina is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kore Mining and Lumina Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumina Gold Corp and Kore 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 Kore Mining are associated (or correlated) with Lumina Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumina Gold Corp has no effect on the direction of Kore Mining i.e., Kore Mining and Lumina Gold go up and down completely randomly.

Pair Corralation between Kore Mining and Lumina Gold

Assuming the 90 days trading horizon Kore Mining is not expected to generate positive returns. Moreover, Kore Mining is 4.09 times more volatile than Lumina Gold Corp. It trades away all of its potential returns to assume current level of volatility. Lumina Gold Corp is currently generating about -0.05 per unit of risk. If you would invest  4.00  in Kore Mining on September 4, 2024 and sell it today you would lose (0.50) from holding Kore Mining or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Kore Mining  vs.  Lumina Gold Corp

Kore Mining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kore Mining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kore Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Lumina Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lumina Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lumina Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kore Mining and Lumina Gold

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

The idea behind Kore Mining and Lumina Gold Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.