Correlation Between Dore Copper and Bell Copper

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

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

Diversification Opportunities for Dore Copper and Bell Copper

-0.67

Correlation Coefficient

Dore Copper  Bell Copper

Excellent diversification

The 3 months correlation between Dore and Bell is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dore Copper Mining and Bell Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Copper Corp and Dore Copper 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 Dore Copper Mining are associated (or correlated) with Bell Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Copper Corp has no effect on the direction of Dore Copper i.e., Dore Copper and Bell Copper go up and down completely randomly.

Pair Corralation between Dore Copper and Bell Copper

Assuming the 90 days trading horizon Dore Copper Mining is expected to generate 0.9 times more return on investment than Bell Copper. However, Dore Copper Mining is 1.11 times less risky than Bell Copper. It trades about 0.09 of its potential returns per unit of risk. Bell Copper Corp is currently generating about -0.04 per unit of risk. If you would invest  11.00  in Dore Copper Mining on September 15, 2024 and sell it today you would earn a total of  3.00  from holding Dore Copper Mining or generate 27.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Dore Copper Mining  vs.  Bell Copper Corp

Dore Copper Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dore Copper Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Dore Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Bell Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell 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 Dore Copper and Bell Copper

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

The idea behind Dore Copper Mining and Bell 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.