Correlation Between Copperbank Resources and Shenzhen Investment

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

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

Diversification Opportunities for Copperbank Resources and Shenzhen Investment

-0.85

Correlation Coefficient

Copperbank Resources  Shenzhen Investment

Pay attention - limited upside

The 3 months correlation between Copperbank and Shenzhen is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Copperbank Resources Corp and Shenzhen Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment and Copperbank 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 Copperbank Resources Corp are associated (or correlated) with Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment has no effect on the direction of Copperbank Resources i.e., Copperbank Resources and Shenzhen Investment go up and down completely randomly.

Pair Corralation between Copperbank Resources and Shenzhen Investment

Assuming the 90 days horizon Copperbank Resources Corp is expected to under-perform the Shenzhen Investment. In addition to that, Copperbank Resources is 4.7 times more volatile than Shenzhen Investment Holdings. It trades about -0.13 of its total potential returns per unit of risk. Shenzhen Investment Holdings is currently generating about 0.13 per unit of volatility. If you would invest  21.00  in Shenzhen Investment Holdings on October 25, 2024 and sell it today you would earn a total of  1.00  from holding Shenzhen Investment Holdings or generate 4.76% return on investment over 90 days.

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

Copperbank Resources Corp  vs.  Shenzhen Investment Holdings

Copperbank Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copperbank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Shenzhen Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Investment Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Shenzhen Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Copperbank Resources and Shenzhen Investment

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

The idea behind Copperbank Resources Corp and Shenzhen Investment Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .