Correlation Between Constellium and Kinross Gold

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

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

Diversification Opportunities for Constellium and Kinross Gold

0.76

Correlation Coefficient

Constellium  Kinross Gold

Poor diversification

The 3 months correlation between Constellium and Kinross is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and Kinross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinross Gold and Constellium 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 Constellium Nv are associated (or correlated) with Kinross Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinross Gold has no effect on the direction of Constellium i.e., Constellium and Kinross Gold go up and down completely randomly.

Pair Corralation between Constellium and Kinross Gold

Given the investment horizon of 90 days Constellium Nv is expected to under-perform the Kinross Gold. But the stock apears to be less risky and, when comparing its historical volatility, Constellium Nv is 1.07 times less risky than Kinross Gold. The stock trades about -0.26 of its potential returns per unit of risk. The Kinross Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  616.00  in Kinross Gold on February 1, 2024 and sell it today you would earn a total of  29.00  from holding Kinross Gold or generate 4.71% return on investment over 90 days.

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

Constellium Nv  vs.  Kinross Gold

Constellium Nv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Constellium Nv are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Constellium is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Kinross Gold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Kinross Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellium and Kinross Gold

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

The idea behind Constellium Nv and Kinross Gold 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.