Correlation Between Copper Mountain and Aguila American

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Can any of the company-specific risk be diversified away by investing in both Copper Mountain and Aguila American 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 Copper Mountain and Aguila American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Copper Mountain Mining and Aguila American Gold, you can compare the effects of market volatilities on Copper Mountain and Aguila American 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 Copper Mountain with a short position of Aguila American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper Mountain and Aguila American.

Diversification Opportunities for Copper Mountain and Aguila American

-0.43
  Correlation Coefficient

Very good diversification

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

Pair Corralation between Copper Mountain and Aguila American

Assuming the 90 days horizon Copper Mountain Mining is expected to generate 16.26 times more return on investment than Aguila American. However, Copper Mountain is 16.26 times more volatile than Aguila American Gold. It trades about 0.15 of its potential returns per unit of risk. Aguila American Gold is currently generating about 0.1 per unit of risk. If you would invest  0.01  in Copper Mountain Mining on September 20, 2024 and sell it today you would earn a total of  16.99  from holding Copper Mountain Mining or generate 169900.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy84.68%
ValuesDaily Returns

Copper Mountain Mining  vs.  Aguila American Gold

 Performance 
       Timeline  
Copper Mountain Mining 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Copper Mountain Mining 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 primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Aguila American Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Aguila American Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Aguila American reported solid returns over the last few months and may actually be approaching a breakup point.

Copper Mountain and Aguila American Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Copper Mountain and Aguila American

The main advantage of trading using opposite Copper Mountain and Aguila American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copper Mountain position performs unexpectedly, Aguila American 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 Aguila American will offset losses from the drop in Aguila American's long position.
The idea behind Copper Mountain Mining and Aguila American Gold 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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