Correlation Between Electra Battery and Kutcho Copper

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

Diversification Opportunities for Electra Battery and Kutcho Copper

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Electra and Kutcho is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Kutcho Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kutcho Copper Corp and Electra Battery 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 Electra Battery Materials are associated (or correlated) with Kutcho Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kutcho Copper Corp has no effect on the direction of Electra Battery i.e., Electra Battery and Kutcho Copper go up and down completely randomly.

Pair Corralation between Electra Battery and Kutcho Copper

Assuming the 90 days trading horizon Electra Battery Materials is expected to generate 21.13 times more return on investment than Kutcho Copper. However, Electra Battery is 21.13 times more volatile than Kutcho Copper Corp. It trades about 0.24 of its potential returns per unit of risk. Kutcho Copper Corp is currently generating about 0.09 per unit of risk. If you would invest  62.00  in Electra Battery Materials on October 8, 2024 and sell it today you would earn a total of  199.00  from holding Electra Battery Materials or generate 320.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Electra Battery Materials  vs.  Kutcho Copper Corp

 Performance 
       Timeline  
Electra Battery Materials 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Electra Battery Materials are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, Electra Battery showed solid returns over the last few months and may actually be approaching a breakup point.
Kutcho Copper Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kutcho 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Electra Battery and Kutcho Copper Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Electra Battery and Kutcho Copper

The main advantage of trading using opposite Electra Battery and Kutcho Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery position performs unexpectedly, Kutcho 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 Kutcho Copper will offset losses from the drop in Kutcho Copper's long position.
The idea behind Electra Battery Materials and Kutcho 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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