Correlation Between Highland Copper and Surge Copper

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

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

Diversification Opportunities for Highland Copper and Surge Copper

0.53

Correlation Coefficient

Highland Copper  Surge Copper

Very weak diversification

The 3 months correlation between Highland and Surge is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Highland Copper 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 Highland 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 Highland Copper 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 Highland Copper i.e., Highland Copper and Surge Copper go up and down completely randomly.

Pair Corralation between Highland Copper and Surge Copper

Given the investment horizon of 90 days Highland Copper is expected to generate 1.01 times more return on investment than Surge Copper. However, Highland Copper is 1.01 times more volatile than Surge Copper Corp. It trades about 0.12 of its potential returns per unit of risk. Surge Copper Corp is currently generating about 0.07 per unit of risk. If you would invest  7.50  in Highland Copper on December 29, 2024 and sell it today you would earn a total of  3.50  from holding Highland Copper or generate 46.67% return on investment over 90 days.

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

Highland Copper  vs.  Surge Copper Corp

Highland Copper

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Copper are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Highland Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Surge Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Surge Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highland Copper and Surge Copper

The main advantage of trading using opposite Highland Copper and Surge Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Copper 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 Highland Copper 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.