Correlation Between Century Wind and First Copper

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

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

Diversification Opportunities for Century Wind and First Copper

0.06

Correlation Coefficient

Century Wind  First Copper

Significant diversification

The 3 months correlation between Century and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and First Copper Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Copper Technology and Century Wind 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 Century Wind Power are associated (or correlated) with First Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Copper Technology has no effect on the direction of Century Wind i.e., Century Wind and First Copper go up and down completely randomly.

Pair Corralation between Century Wind and First Copper

Assuming the 90 days trading horizon Century Wind Power is expected to under-perform the First Copper. But the stock apears to be less risky and, when comparing its historical volatility, Century Wind Power is 1.12 times less risky than First Copper. The stock trades about -0.02 of its potential returns per unit of risk. The First Copper Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,740  in First Copper Technology on December 30, 2024 and sell it today you would earn a total of  780.00  from holding First Copper Technology or generate 20.86% return on investment over 90 days.

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

Century Wind Power  vs.  First Copper Technology

Century Wind Power

Risk-Adjusted Performance

Very Weak

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

First Copper Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Copper Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, First Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Wind and First Copper

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

The idea behind Century Wind Power and First Copper Technology 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.