Correlation Between Kodiak Copper and Mountain Boy

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

Diversification Opportunities for Kodiak Copper and Mountain Boy

0.61

Correlation Coefficient

Kodiak Copper  Mountain Boy

Poor diversification

The 3 months correlation between Kodiak and Mountain is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Copper Corp and Mountain Boy Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Boy Minerals 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 Mountain Boy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Boy Minerals has no effect on the direction of Kodiak Copper i.e., Kodiak Copper and Mountain Boy go up and down completely randomly.

Pair Corralation between Kodiak Copper and Mountain Boy

Assuming the 90 days horizon Kodiak Copper Corp is expected to under-perform the Mountain Boy. But the otc stock apears to be less risky and, when comparing its historical volatility, Kodiak Copper Corp is 3.85 times less risky than Mountain Boy. The otc stock trades about -0.04 of its potential returns per unit of risk. The Mountain Boy Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.44  in Mountain Boy Minerals on September 2, 2024 and sell it today you would lose (0.20) from holding Mountain Boy Minerals or give up 13.89% of portfolio value over 90 days.

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

Kodiak Copper Corp  vs.  Mountain Boy Minerals

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 latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Mountain Boy Minerals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mountain Boy Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Mountain Boy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kodiak Copper and Mountain Boy

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

The idea behind Kodiak Copper Corp and Mountain Boy Minerals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.