Correlation Between Faraday Copper and Serabi Gold

Can any of the company-specific risk be diversified away by investing in both Faraday Copper and Serabi Gold 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 Serabi Gold 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 Serabi Gold PLC, you can compare the effects of market volatilities on Faraday Copper and Serabi Gold 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 Serabi Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and Serabi Gold.

Diversification Opportunities for Faraday Copper and Serabi Gold

0.3

Correlation Coefficient

Faraday Copper  Serabi Gold

Weak diversification

The 3 months correlation between Faraday and Serabi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Serabi Gold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Serabi Gold PLC 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 Serabi Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Serabi Gold PLC has no effect on the direction of Faraday Copper i.e., Faraday Copper and Serabi Gold go up and down completely randomly.

Pair Corralation between Faraday Copper and Serabi Gold

Assuming the 90 days trading horizon Faraday Copper is expected to generate 11.96 times less return on investment than Serabi Gold. But when comparing it to its historical volatility, Faraday Copper Corp is 2.3 times less risky than Serabi Gold. It trades about 0.03 of its potential returns per unit of risk. Serabi Gold PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Serabi Gold PLC on December 4, 2024 and sell it today you would earn a total of  94.00  from holding Serabi Gold PLC or generate 51.93% return on investment over 90 days.

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

Faraday Copper Corp  vs.  Serabi Gold PLC

Faraday Copper Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Faraday Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Serabi Gold PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Serabi Gold PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Serabi Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and Serabi Gold

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

The idea behind Faraday Copper Corp and Serabi Gold PLC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.