Correlation Between Copper Road and Sun Peak

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

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

Diversification Opportunities for Copper Road and Sun Peak

0.56

Correlation Coefficient

Copper Road  Sun Peak

Very weak diversification

The 3 months correlation between Copper and Sun is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Copper Road Resources and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and Copper Road 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 Road Resources are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Copper Road i.e., Copper Road and Sun Peak go up and down completely randomly.

Pair Corralation between Copper Road and Sun Peak

Assuming the 90 days horizon Copper Road Resources is expected to generate 6.34 times more return on investment than Sun Peak. However, Copper Road is 6.34 times more volatile than Sun Peak Metals. It trades about 0.08 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.04 per unit of risk. If you would invest  1.50  in Copper Road Resources on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Copper Road Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Copper Road Resources  vs.  Sun Peak Metals

Copper Road Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Road Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Copper Road showed solid returns over the last few months and may actually be approaching a breakup point.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Copper Road and Sun Peak

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

The idea behind Copper Road Resources and Sun Peak Metals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.