Correlation Between Green Shift and Surge Copper

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

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

Diversification Opportunities for Green Shift and Surge Copper

0.08

Correlation Coefficient

Green Shift  Surge Copper

Significant diversification

The 3 months correlation between Green and Surge is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Green Shift Commodities and Surge Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Copper Corp and Green Shift 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 Green Shift Commodities are associated (or correlated) with Surge Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Copper Corp has no effect on the direction of Green Shift i.e., Green Shift and Surge Copper go up and down completely randomly.

Pair Corralation between Green Shift and Surge Copper

Assuming the 90 days horizon Green Shift Commodities is expected to generate 2.83 times more return on investment than Surge Copper. However, Green Shift is 2.83 times more volatile than Surge Copper Corp. It trades about 0.14 of its potential returns per unit of risk. Surge Copper Corp is currently generating about 0.1 per unit of risk. If you would invest  2.51  in Green Shift Commodities on December 3, 2024 and sell it today you would earn a total of  0.63  from holding Green Shift Commodities or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Green Shift Commodities  vs.  Surge Copper Corp

Green Shift Commodities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green Shift Commodities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Green Shift reported solid returns over the last few months and may actually be approaching a breakup point.

Surge Copper Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Copper Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Surge 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 Green Shift and Surge Copper

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

The idea behind Green Shift Commodities and Surge 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.