Correlation Between Klondike Silver and Baroyeca Gold

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

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

Diversification Opportunities for Klondike Silver and Baroyeca Gold

0.79

Correlation Coefficient

Klondike Silver  Baroyeca Gold

Poor diversification

The 3 months correlation between Klondike and Baroyeca is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Baroyeca Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baroyeca Gold Silver and Klondike Silver 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 Klondike Silver Corp are associated (or correlated) with Baroyeca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baroyeca Gold Silver has no effect on the direction of Klondike Silver i.e., Klondike Silver and Baroyeca Gold go up and down completely randomly.

Pair Corralation between Klondike Silver and Baroyeca Gold

Given the investment horizon of 90 days Klondike Silver Corp is expected to generate 1.39 times more return on investment than Baroyeca Gold. However, Klondike Silver is 1.39 times more volatile than Baroyeca Gold Silver. It trades about 0.0 of its potential returns per unit of risk. Baroyeca Gold Silver is currently generating about -0.03 per unit of risk. If you would invest  2.50  in Klondike Silver Corp on September 29, 2024 and sell it today you would lose (0.50) from holding Klondike Silver Corp or give up 20.0% of portfolio value over 90 days.

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

Klondike Silver Corp  vs.  Baroyeca Gold Silver

Klondike Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baroyeca Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baroyeca Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Pair Trading with Klondike Silver and Baroyeca Gold

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

The idea behind Klondike Silver Corp and Baroyeca Gold Silver 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.