Correlation Between Dor Copper and Aguila American

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

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

Diversification Opportunities for Dor Copper and Aguila American

0.05

Correlation Coefficient

Dor Copper  Aguila American

Significant diversification

The 3 months correlation between Dor and Aguila is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dor Copper 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 Dor 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 Dor Copper 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 Dor Copper i.e., Dor Copper and Aguila American go up and down completely randomly.

Pair Corralation between Dor Copper and Aguila American

Assuming the 90 days horizon Dor Copper is expected to generate 2.63 times less return on investment than Aguila American. In addition to that, Dor Copper is 1.88 times more volatile than Aguila American Gold. It trades about 0.1 of its total potential returns per unit of risk. Aguila American Gold is currently generating about 0.48 per unit of volatility. If you would invest  20.00  in Aguila American Gold on October 6, 2024 and sell it today you would earn a total of  8.00  from holding Aguila American Gold or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	22.58%
Values	Daily Returns

Dor Copper Mining  vs.  Aguila American Gold

Dor Copper Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dor Copper Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Dor Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Aguila American Gold

Risk-Adjusted Performance

0 of 100

Very Strong

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

Pair Trading with Dor Copper and Aguila American

The main advantage of trading using opposite Dor Copper and Aguila American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dor Copper 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 Dor Copper 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.