Correlation Between De Grey and Western Copper

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

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

Diversification Opportunities for De Grey and Western Copper

-0.43

Correlation Coefficient

De Grey  Western Copper

Very good diversification

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

Pair Corralation between De Grey and Western Copper

Assuming the 90 days trading horizon De Grey Mining is expected to under-perform the Western Copper. In addition to that, De Grey is 1.05 times more volatile than Western Copper and. It trades about -0.05 of its total potential returns per unit of risk. Western Copper and is currently generating about 0.01 per unit of volatility. If you would invest  103.00  in Western Copper and on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Western Copper and or generate 0.0% return on investment over 90 days.

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

De Grey Mining  vs.  Western Copper and

De Grey Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Western Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with De Grey and Western Copper

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

The idea behind De Grey Mining and Western Copper and 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.