Correlation Between Faraday Copper and Gunpoint Exploration

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

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

Diversification Opportunities for Faraday Copper and Gunpoint Exploration

0.33

Correlation Coefficient

Faraday Copper  Gunpoint Exploration

Weak diversification

The 3 months correlation between Faraday and Gunpoint is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Gunpoint Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunpoint Exploration and Faraday 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 Faraday Copper Corp are associated (or correlated) with Gunpoint Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunpoint Exploration has no effect on the direction of Faraday Copper i.e., Faraday Copper and Gunpoint Exploration go up and down completely randomly.

Pair Corralation between Faraday Copper and Gunpoint Exploration

Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.76 times more return on investment than Gunpoint Exploration. However, Faraday Copper Corp is 1.31 times less risky than Gunpoint Exploration. It trades about -0.14 of its potential returns per unit of risk. Gunpoint Exploration is currently generating about -0.12 per unit of risk. If you would invest  89.00  in Faraday Copper Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Faraday Copper Corp or give up 6.74% of portfolio value over 90 days.

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

Faraday Copper Corp  vs.  Gunpoint Exploration

Faraday Copper Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Faraday Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Gunpoint Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunpoint Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gunpoint Exploration is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Faraday Copper and Gunpoint Exploration

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

The idea behind Faraday Copper Corp and Gunpoint Exploration 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.