Correlation Between Kodiak Copper and CMC Metals

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

Diversification Opportunities for Kodiak Copper and CMC Metals

-0.22

Correlation Coefficient

Kodiak Copper  CMC Metals

Very good diversification

The 3 months correlation between Kodiak and CMC is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Copper Corp and CMC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Metals 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 CMC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Metals has no effect on the direction of Kodiak Copper i.e., Kodiak Copper and CMC Metals go up and down completely randomly.

Pair Corralation between Kodiak Copper and CMC Metals

Assuming the 90 days horizon Kodiak Copper Corp is expected to under-perform the CMC Metals. But the otc stock apears to be less risky and, when comparing its historical volatility, Kodiak Copper Corp is 11.28 times less risky than CMC Metals. The otc stock trades about -0.03 of its potential returns per unit of risk. The CMC Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.00  in CMC Metals on August 31, 2024 and sell it today you would earn a total of  0.00  from holding CMC Metals or generate 0.0% return on investment over 90 days.

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

Kodiak Copper Corp  vs.  CMC Metals

Kodiak Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kodiak Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Kodiak Copper is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CMC Metals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CMC Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Copper and CMC Metals

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

The idea behind Kodiak Copper Corp and CMC Metals 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.