Correlation Between Wildsky Resources and K2 Gold

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Can any of the company-specific risk be diversified away by investing in both Wildsky Resources and K2 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 Wildsky Resources and K2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wildsky Resources and K2 Gold, you can compare the effects of market volatilities on Wildsky Resources and K2 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 Wildsky Resources with a short position of K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wildsky Resources and K2 Gold.

Diversification Opportunities for Wildsky Resources and K2 Gold

WildskyKTODiversified AwayWildskyKTODiversified Away100%
-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Wildsky and KTO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Wildsky Resources and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold and Wildsky 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 Wildsky Resources are associated (or correlated) with K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Wildsky Resources i.e., Wildsky Resources and K2 Gold go up and down completely randomly.

Pair Corralation between Wildsky Resources and K2 Gold

Assuming the 90 days horizon Wildsky Resources is expected to under-perform the K2 Gold. But the stock apears to be less risky and, when comparing its historical volatility, Wildsky Resources is 1.2 times less risky than K2 Gold. The stock trades about -0.03 of its potential returns per unit of risk. The K2 Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  12.00  in K2 Gold on October 14, 2024 and sell it today you would earn a total of  1.00  from holding K2 Gold or generate 8.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.39%
ValuesDaily Returns

Wildsky Resources  vs.  K2 Gold

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-100102030
JavaScript chart by amCharts 3.21.15WSK KTO
       Timeline  
Wildsky Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wildsky Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.080.0850.090.0950.10.1050.11
K2 Gold 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in K2 Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, K2 Gold showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.10.110.120.130.140.150.160.17

Wildsky Resources and K2 Gold Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.75-7.3-4.86-2.410.03972.384.777.159.54 0.00750.00800.00850.00900.00950.01000.0105
JavaScript chart by amCharts 3.21.15WSK KTO
       Returns  

Pair Trading with Wildsky Resources and K2 Gold

The main advantage of trading using opposite Wildsky Resources and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wildsky Resources position performs unexpectedly, K2 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 K2 Gold will offset losses from the drop in K2 Gold's long position.
The idea behind Wildsky Resources and K2 Gold 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.

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