Correlation Between Fosterville South and KORE Mining

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

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

Diversification Opportunities for Fosterville South and KORE Mining

-0.36

Correlation Coefficient

Fosterville South  KORE Mining

Very good diversification

The 3 months correlation between Fosterville and KORE is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fosterville South Exploration and KORE Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORE Mining and Fosterville South 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 Fosterville South Exploration are associated (or correlated) with KORE Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORE Mining has no effect on the direction of Fosterville South i.e., Fosterville South and KORE Mining go up and down completely randomly.

Pair Corralation between Fosterville South and KORE Mining

Assuming the 90 days horizon Fosterville South Exploration is expected to generate 0.75 times more return on investment than KORE Mining. However, Fosterville South Exploration is 1.33 times less risky than KORE Mining. It trades about 0.04 of its potential returns per unit of risk. KORE Mining is currently generating about 0.01 per unit of risk. If you would invest  74.00  in Fosterville South Exploration on February 7, 2024 and sell it today you would earn a total of  1.00  from holding Fosterville South Exploration or generate 1.35% return on investment over 90 days.

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

Fosterville South Exploration  vs.  KORE Mining

Fosterville South

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fosterville South Exploration are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Fosterville South reported solid returns over the last few months and may actually be approaching a breakup point.

KORE Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KORE Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, KORE Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fosterville South and KORE Mining

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

The idea behind Fosterville South Exploration and KORE Mining 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 Global Correlations module to find global opportunities by holding instruments from different markets.