Correlation Between Metals X and Interra Copper

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

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

Diversification Opportunities for Metals X and Interra Copper

0.24

Correlation Coefficient

Metals X  Interra Copper

Modest diversification

The 3 months correlation between Metals and Interra is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Metals X Limited and Interra Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interra Copper Corp and Metals X 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 Metals X Limited are associated (or correlated) with Interra Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interra Copper Corp has no effect on the direction of Metals X i.e., Metals X and Interra Copper go up and down completely randomly.

Pair Corralation between Metals X and Interra Copper

Assuming the 90 days horizon Metals X is expected to generate 2.98 times less return on investment than Interra Copper. But when comparing it to its historical volatility, Metals X Limited is 2.53 times less risky than Interra Copper. It trades about 0.06 of its potential returns per unit of risk. Interra Copper Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.63  in Interra Copper Corp on September 3, 2024 and sell it today you would lose (0.05) from holding Interra Copper Corp or give up 0.75% of portfolio value over 90 days.

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

Metals X Limited  vs.  Interra Copper Corp

Metals X Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metals X Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals X reported solid returns over the last few months and may actually be approaching a breakup point.

Interra Copper Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Interra Copper Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Interra Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metals X and Interra Copper

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

The idea behind Metals X Limited and Interra 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.