Correlation Between CANEX Metals and Surge Copper

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

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

Diversification Opportunities for CANEX Metals and Surge Copper

0.43

Correlation Coefficient

CANEX Metals  Surge Copper

Very weak diversification

The 3 months correlation between CANEX and Surge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CANEX Metals and Surge Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Copper Corp and CANEX Metals 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 CANEX Metals are associated (or correlated) with Surge Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Copper Corp has no effect on the direction of CANEX Metals i.e., CANEX Metals and Surge Copper go up and down completely randomly.

Pair Corralation between CANEX Metals and Surge Copper

Assuming the 90 days trading horizon CANEX Metals is expected to generate 2.12 times more return on investment than Surge Copper. However, CANEX Metals is 2.12 times more volatile than Surge Copper Corp. It trades about 0.01 of its potential returns per unit of risk. Surge Copper Corp is currently generating about -0.06 per unit of risk. If you would invest  5.00  in CANEX Metals on September 5, 2024 and sell it today you would lose (1.50) from holding CANEX Metals or give up 30.0% of portfolio value over 90 days.

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

CANEX Metals  vs.  Surge Copper Corp

CANEX Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CANEX Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CANEX Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Surge Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CANEX Metals and Surge Copper

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

The idea behind CANEX Metals and Surge 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.