Correlation Between South Pacific and Kinross Gold

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

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

Diversification Opportunities for South Pacific and Kinross Gold

-0.24

Correlation Coefficient

South Pacific  Kinross Gold

Very good diversification

The 3 months correlation between South and Kinross is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Kinross Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold Corp and South Pacific 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 South Pacific Metals are associated (or correlated) with Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold Corp has no effect on the direction of South Pacific i.e., South Pacific and Kinross Gold go up and down completely randomly.

Pair Corralation between South Pacific and Kinross Gold

Assuming the 90 days trading horizon South Pacific Metals is expected to under-perform the Kinross Gold. In addition to that, South Pacific is 1.85 times more volatile than Kinross Gold Corp. It trades about -0.11 of its total potential returns per unit of risk. Kinross Gold Corp is currently generating about 0.08 per unit of volatility. If you would invest  1,212  in Kinross Gold Corp on September 29, 2024 and sell it today you would earn a total of  132.00  from holding Kinross Gold Corp or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

South Pacific Metals  vs.  Kinross Gold Corp

South Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kinross Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Kinross Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with South Pacific and Kinross Gold

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

The idea behind South Pacific Metals and Kinross 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.