Correlation Between Kodiak Copper and AbraSilver Resource

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

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

Diversification Opportunities for Kodiak Copper and AbraSilver Resource

0.88

Correlation Coefficient

Kodiak Copper  AbraSilver Resource

Very poor diversification

The 3 months correlation between Kodiak and AbraSilver is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Copper Corp and AbraSilver Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbraSilver Resource Corp and Kodiak 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 Kodiak Copper Corp are associated (or correlated) with AbraSilver Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbraSilver Resource Corp has no effect on the direction of Kodiak Copper i.e., Kodiak Copper and AbraSilver Resource go up and down completely randomly.

Pair Corralation between Kodiak Copper and AbraSilver Resource

Assuming the 90 days horizon Kodiak Copper Corp is expected to under-perform the AbraSilver Resource. But the otc stock apears to be less risky and, when comparing its historical volatility, Kodiak Copper Corp is 1.01 times less risky than AbraSilver Resource. The otc stock trades about -0.02 of its potential returns per unit of risk. The AbraSilver Resource Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  114.00  in AbraSilver Resource Corp on November 20, 2024 and sell it today you would earn a total of  111.00  from holding AbraSilver Resource Corp or generate 97.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Kodiak Copper Corp  vs.  AbraSilver Resource Corp

Kodiak Copper Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Copper Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Kodiak Copper reported solid returns over the last few months and may actually be approaching a breakup point.

AbraSilver Resource Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AbraSilver Resource Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AbraSilver Resource reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Copper and AbraSilver Resource

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

The idea behind Kodiak Copper Corp and AbraSilver Resource 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.