Correlation Between Marimaca Copper and Klondike Gold

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

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

Diversification Opportunities for Marimaca Copper and Klondike Gold

-0.59

Correlation Coefficient

Marimaca Copper  Klondike Gold

Excellent diversification

The 3 months correlation between Marimaca and Klondike is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Marimaca Copper Corp and Klondike Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klondike Gold Corp and Marimaca Copper 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 Marimaca Copper Corp are associated (or correlated) with Klondike Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klondike Gold Corp has no effect on the direction of Marimaca Copper i.e., Marimaca Copper and Klondike Gold go up and down completely randomly.

Pair Corralation between Marimaca Copper and Klondike Gold

Assuming the 90 days trading horizon Marimaca Copper Corp is expected to generate 0.56 times more return on investment than Klondike Gold. However, Marimaca Copper Corp is 1.78 times less risky than Klondike Gold. It trades about 0.13 of its potential returns per unit of risk. Klondike Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  420.00  in Marimaca Copper Corp on October 11, 2024 and sell it today you would earn a total of  110.00  from holding Marimaca Copper Corp or generate 26.19% return on investment over 90 days.

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

Marimaca Copper Corp  vs.  Klondike Gold Corp

Marimaca Copper Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Marimaca Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Klondike Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Klondike Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Klondike Gold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Marimaca Copper and Klondike Gold

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

The idea behind Marimaca Copper Corp and Klondike 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.