Correlation Between Karora Resources and Japan Gold

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

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

Diversification Opportunities for Karora Resources and Japan Gold

0.16

Correlation Coefficient

Karora Resources  Japan Gold

Average diversification

The 3 months correlation between Karora and Japan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Karora Resources and Japan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Gold Corp and Karora Resources 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 Karora Resources are associated (or correlated) with Japan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Gold Corp has no effect on the direction of Karora Resources i.e., Karora Resources and Japan Gold go up and down completely randomly.

Pair Corralation between Karora Resources and Japan Gold

If you would invest  483.00  in Karora Resources on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Karora Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Karora Resources  vs.  Japan Gold Corp

Karora Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Japan Gold Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Japan Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Karora Resources and Japan Gold

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

The idea behind Karora Resources and Japan 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.