Correlation Between K2 Gold and GoviEx Uranium

Can any of the company-specific risk be diversified away by investing in both K2 Gold and GoviEx Uranium 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 K2 Gold and GoviEx Uranium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between K2 Gold and GoviEx Uranium, you can compare the effects of market volatilities on K2 Gold and GoviEx Uranium 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 K2 Gold with a short position of GoviEx Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Gold and GoviEx Uranium.

Diversification Opportunities for K2 Gold and GoviEx Uranium

0.0

Correlation Coefficient

K2 Gold  GoviEx Uranium

Pay attention - limited upside

The 3 months correlation between KTO and GoviEx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding K2 Gold and GoviEx Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoviEx Uranium and K2 Gold 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 K2 Gold are associated (or correlated) with GoviEx Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoviEx Uranium has no effect on the direction of K2 Gold i.e., K2 Gold and GoviEx Uranium go up and down completely randomly.

Pair Corralation between K2 Gold and GoviEx Uranium

Assuming the 90 days horizon K2 Gold is expected to generate 1.03 times more return on investment than GoviEx Uranium. However, K2 Gold is 1.03 times more volatile than GoviEx Uranium. It trades about 0.04 of its potential returns per unit of risk. GoviEx Uranium is currently generating about 0.01 per unit of risk. If you would invest  13.00  in K2 Gold on September 12, 2024 and sell it today you would lose (1.00) from holding K2 Gold or give up 7.69% of portfolio value over 90 days.

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

K2 Gold  vs.  GoviEx Uranium

K2 Gold

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in K2 Gold are ranked lower than 6 (%) 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.

GoviEx Uranium

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoviEx Uranium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, GoviEx Uranium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with K2 Gold and GoviEx Uranium

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

The idea behind K2 Gold and GoviEx Uranium 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.