Correlation Between Nevada Copper and Copperbank Resources

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

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

Diversification Opportunities for Nevada Copper and Copperbank Resources

-0.01

Correlation Coefficient

Nevada Copper  Copperbank Resources

Good diversification

The 3 months correlation between Nevada and Copperbank is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nevada Copper Corp and Copperbank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copperbank Resources Corp and Nevada 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 Nevada Copper Corp are associated (or correlated) with Copperbank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copperbank Resources Corp has no effect on the direction of Nevada Copper i.e., Nevada Copper and Copperbank Resources go up and down completely randomly.

Pair Corralation between Nevada Copper and Copperbank Resources

Assuming the 90 days horizon Nevada Copper Corp is expected to under-perform the Copperbank Resources. In addition to that, Nevada Copper is 1.79 times more volatile than Copperbank Resources Corp. It trades about -0.04 of its total potential returns per unit of risk. Copperbank Resources Corp is currently generating about 0.03 per unit of volatility. If you would invest  40.00  in Copperbank Resources Corp on September 20, 2024 and sell it today you would earn a total of  9.00  from holding Copperbank Resources Corp or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Nevada Copper Corp  vs.  Copperbank Resources Corp

Nevada Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Copperbank Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copperbank Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nevada Copper and Copperbank Resources

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

The idea behind Nevada Copper Corp and Copperbank Resources 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.