Correlation Between Talisman Mining and Kinatico

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

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

Diversification Opportunities for Talisman Mining and Kinatico

0.05

Correlation Coefficient

Talisman Mining  Kinatico

Significant diversification

The 3 months correlation between Talisman and Kinatico is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and Kinatico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinatico and Talisman 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 Talisman Mining are associated (or correlated) with Kinatico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinatico has no effect on the direction of Talisman Mining i.e., Talisman Mining and Kinatico go up and down completely randomly.

Pair Corralation between Talisman Mining and Kinatico

Assuming the 90 days trading horizon Talisman Mining is expected to generate 2.16 times less return on investment than Kinatico. But when comparing it to its historical volatility, Talisman Mining is 1.14 times less risky than Kinatico. It trades about 0.05 of its potential returns per unit of risk. Kinatico is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Kinatico on September 4, 2024 and sell it today you would earn a total of  3.00  from holding Kinatico or generate 27.27% return on investment over 90 days.

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

Talisman Mining  vs.  Kinatico

Talisman Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talisman Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Talisman Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kinatico

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinatico are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kinatico unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Talisman Mining and Kinatico

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

The idea behind Talisman Mining and Kinatico 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.