Correlation Between Libero Copper and Patagonia Gold

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

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

Diversification Opportunities for Libero Copper and Patagonia Gold

0.02

Correlation Coefficient

Libero Copper  Patagonia Gold

Significant diversification

The 3 months correlation between Libero and Patagonia is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Libero Copper Corp and Patagonia Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patagonia Gold Corp and Libero 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 Libero Copper Corp are associated (or correlated) with Patagonia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patagonia Gold Corp has no effect on the direction of Libero Copper i.e., Libero Copper and Patagonia Gold go up and down completely randomly.

Pair Corralation between Libero Copper and Patagonia Gold

Assuming the 90 days horizon Libero Copper Corp is expected to generate 0.64 times more return on investment than Patagonia Gold. However, Libero Copper Corp is 1.55 times less risky than Patagonia Gold. It trades about -0.06 of its potential returns per unit of risk. Patagonia Gold Corp is currently generating about -0.07 per unit of risk. If you would invest  39.00  in Libero Copper Corp on September 23, 2024 and sell it today you would lose (5.00) from holding Libero Copper Corp or give up 12.82% of portfolio value over 90 days.

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

Libero Copper Corp  vs.  Patagonia Gold Corp

Libero Copper Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Libero Copper Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Libero Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Patagonia Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Patagonia Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Patagonia Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Libero Copper and Patagonia Gold

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

The idea behind Libero Copper Corp and Patagonia Gold 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.