Correlation Between Kingsrose Mining and Andean Silver

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

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

Diversification Opportunities for Kingsrose Mining and Andean Silver

0.28

Correlation Coefficient

Kingsrose Mining  Andean Silver

Modest diversification

The 3 months correlation between Kingsrose and Andean is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kingsrose Mining and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and Kingsrose 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 Kingsrose Mining are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of Kingsrose Mining i.e., Kingsrose Mining and Andean Silver go up and down completely randomly.

Pair Corralation between Kingsrose Mining and Andean Silver

Assuming the 90 days trading horizon Kingsrose Mining is expected to generate 28.05 times less return on investment than Andean Silver. But when comparing it to its historical volatility, Kingsrose Mining is 1.16 times less risky than Andean Silver. It trades about 0.01 of its potential returns per unit of risk. Andean Silver Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Andean Silver Limited on December 30, 2024 and sell it today you would earn a total of  53.00  from holding Andean Silver Limited or generate 64.63% return on investment over 90 days.

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

Kingsrose Mining  vs.  Andean Silver Limited

Kingsrose Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kingsrose Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Kingsrose Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Andean Silver Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Andean Silver Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Andean Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kingsrose Mining and Andean Silver

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

The idea behind Kingsrose Mining and Andean Silver Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.