Correlation Between Montero Mining and Kesselrun Resources

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

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

Diversification Opportunities for Montero Mining and Kesselrun Resources

-0.12

Correlation Coefficient

Montero Mining  Kesselrun Resources

Good diversification

The 3 months correlation between Montero and Kesselrun is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Montero Mining and and Kesselrun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesselrun Resources and Montero 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 Montero Mining and are associated (or correlated) with Kesselrun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesselrun Resources has no effect on the direction of Montero Mining i.e., Montero Mining and Kesselrun Resources go up and down completely randomly.

Pair Corralation between Montero Mining and Kesselrun Resources

Assuming the 90 days horizon Montero Mining and is expected to under-perform the Kesselrun Resources. But the stock apears to be less risky and, when comparing its historical volatility, Montero Mining and is 2.49 times less risky than Kesselrun Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Kesselrun Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4.50  in Kesselrun Resources on September 4, 2024 and sell it today you would lose (0.50) from holding Kesselrun Resources or give up 11.11% of portfolio value over 90 days.

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

Montero Mining and  vs.  Kesselrun Resources

Montero Mining

Risk-Adjusted Performance

0 of 100

Weak

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

Kesselrun Resources

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kesselrun Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kesselrun Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montero Mining and Kesselrun Resources

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

The idea behind Montero Mining and and Kesselrun Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.