Correlation Between Major Drilling and Libero Copper

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

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

Diversification Opportunities for Major Drilling and Libero Copper

0.18

Correlation Coefficient

Major Drilling  Libero Copper

Average diversification

The 3 months correlation between Major and Libero is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Libero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Libero Copper Corp and Major Drilling 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 Major Drilling Group are associated (or correlated) with Libero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Libero Copper Corp has no effect on the direction of Major Drilling i.e., Major Drilling and Libero Copper go up and down completely randomly.

Pair Corralation between Major Drilling and Libero Copper

Assuming the 90 days trading horizon Major Drilling Group is expected to generate 0.5 times more return on investment than Libero Copper. However, Major Drilling Group is 2.02 times less risky than Libero Copper. It trades about -0.04 of its potential returns per unit of risk. Libero Copper Corp is currently generating about -0.12 per unit of risk. If you would invest  834.00  in Major Drilling Group on December 21, 2024 and sell it today you would lose (58.00) from holding Major Drilling Group or give up 6.95% of portfolio value over 90 days.

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

Major Drilling Group  vs.  Libero Copper Corp

Major Drilling Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Major Drilling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Major Drilling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Libero Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Libero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Major Drilling and Libero Copper

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

The idea behind Major Drilling Group and Libero Copper 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.