Correlation Between Klondike Silver and Nouveau Monde

Can any of the company-specific risk be diversified away by investing in both Klondike Silver and Nouveau Monde 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 Nouveau Monde 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 Nouveau Monde Graphite, you can compare the effects of market volatilities on Klondike Silver and Nouveau Monde 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 Nouveau Monde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klondike Silver and Nouveau Monde.

Diversification Opportunities for Klondike Silver and Nouveau Monde

0.28

Correlation Coefficient

Klondike Silver  Nouveau Monde

Modest diversification

The 3 months correlation between Klondike and Nouveau is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Klondike Silver Corp and Nouveau Monde Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nouveau Monde Graphite 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 Nouveau Monde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nouveau Monde Graphite has no effect on the direction of Klondike Silver i.e., Klondike Silver and Nouveau Monde go up and down completely randomly.

Pair Corralation between Klondike Silver and Nouveau Monde

Given the investment horizon of 90 days Klondike Silver Corp is expected to under-perform the Nouveau Monde. In addition to that, Klondike Silver is 1.86 times more volatile than Nouveau Monde Graphite. It trades about 0.0 of its total potential returns per unit of risk. Nouveau Monde Graphite is currently generating about 0.05 per unit of volatility. If you would invest  214.00  in Nouveau Monde Graphite on September 29, 2024 and sell it today you would earn a total of  15.00  from holding Nouveau Monde Graphite or generate 7.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Klondike Silver Corp  vs.  Nouveau Monde Graphite

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.

Nouveau Monde Graphite

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nouveau Monde Graphite are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nouveau Monde may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Klondike Silver and Nouveau Monde

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

The idea behind Klondike Silver Corp and Nouveau Monde Graphite 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.