Correlation Between Batero Gold and Libero Copper

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

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

Diversification Opportunities for Batero Gold and Libero Copper

-0.62

Correlation Coefficient

Batero Gold  Libero Copper

Excellent diversification

The 3 months correlation between Batero and Libero is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Batero Gold Corp and Libero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libero Copper Corp and Batero Gold 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 Batero Gold Corp are associated (or correlated) with Libero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libero Copper Corp has no effect on the direction of Batero Gold i.e., Batero Gold and Libero Copper go up and down completely randomly.

Pair Corralation between Batero Gold and Libero Copper

Assuming the 90 days horizon Batero Gold Corp is expected to generate 1.88 times more return on investment than Libero Copper. However, Batero Gold is 1.88 times more volatile than Libero Copper Corp. It trades about 0.05 of its potential returns per unit of risk. Libero Copper Corp is currently generating about -0.08 per unit of risk. If you would invest  4.00  in Batero Gold Corp on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Batero Gold Corp or generate 0.0% return on investment over 90 days.

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

Batero Gold Corp  vs.  Libero Copper Corp

Batero Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Batero Gold Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Batero Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Libero Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Libero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Batero Gold and Libero Copper

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

The idea behind Batero Gold Corp and Libero Copper Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.