Correlation Between Kootenay Silver and Thunder Mountain

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

By analyzing existing cross correlation between Kootenay Silver and Thunder Mountain GoldInc, you can compare the effects of market volatilities on Kootenay Silver and Thunder Mountain 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 Thunder Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kootenay Silver and Thunder Mountain.

Diversification Opportunities for Kootenay Silver and Thunder Mountain

0.39

Correlation Coefficient

Kootenay Silver  Thunder Mountain

Weak diversification

The 3 months correlation between Kootenay and Thunder is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kootenay Silver and Thunder Mountain GoldInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Mountain GoldInc 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 Thunder Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Mountain GoldInc has no effect on the direction of Kootenay Silver i.e., Kootenay Silver and Thunder Mountain go up and down completely randomly.

Pair Corralation between Kootenay Silver and Thunder Mountain

Assuming the 90 days horizon Kootenay Silver is expected to generate 2.54 times more return on investment than Thunder Mountain. However, Kootenay Silver is 2.54 times more volatile than Thunder Mountain GoldInc. It trades about 0.14 of its potential returns per unit of risk. Thunder Mountain GoldInc is currently generating about 0.04 per unit of risk. If you would invest  56.00  in Kootenay Silver on February 28, 2024 and sell it today you would earn a total of  44.00  from holding Kootenay Silver or generate 78.57% return on investment over 90 days.

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

Kootenay Silver  vs.  Thunder Mountain GoldInc

Kootenay Silver

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kootenay Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Kootenay Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Thunder Mountain GoldInc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Mountain GoldInc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Thunder Mountain may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Kootenay Silver and Thunder Mountain

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

The idea behind Kootenay Silver and Thunder Mountain GoldInc 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.