Correlation Between Amerigo Resources and Jiangxi Copper

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

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

Diversification Opportunities for Amerigo Resources and Jiangxi Copper

-0.39

Correlation Coefficient

Amerigo Resources  Jiangxi Copper

Very good diversification

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

Pair Corralation between Amerigo Resources and Jiangxi Copper

Assuming the 90 days horizon Amerigo Resources is expected to generate 0.83 times more return on investment than Jiangxi Copper. However, Amerigo Resources is 1.21 times less risky than Jiangxi Copper. It trades about 0.17 of its potential returns per unit of risk. Jiangxi Copper is currently generating about 0.11 per unit of risk. If you would invest  110.00  in Amerigo Resources on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Amerigo Resources or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.67%
Values	Daily Returns

Amerigo Resources  vs.  Jiangxi Copper

Amerigo Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amerigo Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Amerigo Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Jiangxi Copper

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangxi Copper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Jiangxi Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amerigo Resources and Jiangxi Copper

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

The idea behind Amerigo Resources and Jiangxi Copper 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.