Correlation Between First Majestic and Kesselrun Resources

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

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

Diversification Opportunities for First Majestic and Kesselrun Resources

0.85

Correlation Coefficient

First Majestic  Kesselrun Resources

Very poor diversification

The 3 months correlation between First and Kesselrun is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Kesselrun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesselrun Resources and First Majestic 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 First Majestic Silver 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 First Majestic i.e., First Majestic and Kesselrun Resources go up and down completely randomly.

Pair Corralation between First Majestic and Kesselrun Resources

Assuming the 90 days horizon First Majestic is expected to generate 1.4 times less return on investment than Kesselrun Resources. But when comparing it to its historical volatility, First Majestic Silver is 1.67 times less risky than Kesselrun Resources. It trades about 0.16 of its potential returns per unit of risk. Kesselrun Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Kesselrun Resources on April 24, 2025 and sell it today you would earn a total of  1.50  from holding Kesselrun Resources or generate 50.0% return on investment over 90 days.

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

First Majestic Silver  vs.  Kesselrun Resources

First Majestic Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, First Majestic displayed solid returns over the last few months and may actually be approaching a breakup point.

Kesselrun Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kesselrun Resources are ranked lower than 10 (%) 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 First Majestic and Kesselrun Resources

The main advantage of trading using opposite First Majestic and Kesselrun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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 First Majestic Silver 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.