Correlation Between Kootenay Silver and Chesapeake Gold

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

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

Diversification Opportunities for Kootenay Silver and Chesapeake Gold

0.79

Correlation Coefficient

Kootenay Silver  Chesapeake Gold

Poor diversification

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

Pair Corralation between Kootenay Silver and Chesapeake Gold

Assuming the 90 days horizon Kootenay Silver is expected to under-perform the Chesapeake Gold. In addition to that, Kootenay Silver is 1.52 times more volatile than Chesapeake Gold Corp. It trades about -0.22 of its total potential returns per unit of risk. Chesapeake Gold Corp is currently generating about 0.0 per unit of volatility. If you would invest  240.00  in Chesapeake Gold Corp on February 4, 2024 and sell it today you would lose (2.00) from holding Chesapeake Gold Corp or give up 0.83% of portfolio value over 90 days.

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

Kootenay Silver  vs.  Chesapeake Gold Corp

Kootenay Silver

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kootenay Silver are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kootenay Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Gold Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Gold Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chesapeake Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kootenay Silver and Chesapeake Gold

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

The idea behind Kootenay Silver and Chesapeake Gold Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.