Correlation Between Kodiak Copper and Enduro Metals

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

Diversification Opportunities for Kodiak Copper and Enduro Metals

-0.34

Correlation Coefficient

Kodiak Copper  Enduro Metals

Very good diversification

The 3 months correlation between Kodiak and Enduro is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Copper Corp and Enduro Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro 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 Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals has no effect on the direction of Kodiak Copper i.e., Kodiak Copper and Enduro Metals go up and down completely randomly.

Pair Corralation between Kodiak Copper and Enduro Metals

Assuming the 90 days horizon Kodiak Copper Corp is expected to generate 0.97 times more return on investment than Enduro Metals. However, Kodiak Copper Corp is 1.03 times less risky than Enduro Metals. It trades about 0.13 of its potential returns per unit of risk. Enduro Metals is currently generating about -0.01 per unit of risk. If you would invest  25.00  in Kodiak Copper Corp on December 23, 2024 and sell it today you would earn a total of  8.00  from holding Kodiak Copper Corp or generate 32.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Kodiak Copper Corp  vs.  Enduro Metals

Kodiak Copper Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Copper Corp are ranked lower than 10 (%) 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.

Enduro Metals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kodiak Copper and Enduro Metals

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

The idea behind Kodiak Copper Corp and Enduro 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.