Correlation Between First Copper and Onyx Healthcare

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

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

Diversification Opportunities for First Copper and Onyx Healthcare

0.49

Correlation Coefficient

First Copper  Onyx Healthcare

Very weak diversification

The 3 months correlation between First and Onyx is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Copper Technology and Onyx Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Healthcare and First Copper 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 Copper Technology are associated (or correlated) with Onyx Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Healthcare has no effect on the direction of First Copper i.e., First Copper and Onyx Healthcare go up and down completely randomly.

Pair Corralation between First Copper and Onyx Healthcare

Assuming the 90 days trading horizon First Copper is expected to generate 13.37 times less return on investment than Onyx Healthcare. But when comparing it to its historical volatility, First Copper Technology is 1.49 times less risky than Onyx Healthcare. It trades about 0.02 of its potential returns per unit of risk. Onyx Healthcare is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14,700  in Onyx Healthcare on October 20, 2024 and sell it today you would earn a total of  1,200  from holding Onyx Healthcare or generate 8.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

First Copper Technology  vs.  Onyx Healthcare

First Copper Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Copper Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Onyx Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onyx Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Onyx Healthcare is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Copper and Onyx Healthcare

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

The idea behind First Copper Technology and Onyx Healthcare 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.