Correlation Between Northern Graphite and Alpha Copper

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

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

Diversification Opportunities for Northern Graphite and Alpha Copper

-0.68

Correlation Coefficient

Northern Graphite  Alpha Copper

Excellent diversification

The 3 months correlation between Northern and Alpha is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and Alpha Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Copper Corp and Northern Graphite 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 Northern Graphite are associated (or correlated) with Alpha Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Copper Corp has no effect on the direction of Northern Graphite i.e., Northern Graphite and Alpha Copper go up and down completely randomly.

Pair Corralation between Northern Graphite and Alpha Copper

Assuming the 90 days horizon Northern Graphite is expected to under-perform the Alpha Copper. But the otc stock apears to be less risky and, when comparing its historical volatility, Northern Graphite is 1.52 times less risky than Alpha Copper. The otc stock trades about -0.02 of its potential returns per unit of risk. The Alpha Copper Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Alpha Copper Corp on December 23, 2024 and sell it today you would earn a total of  15.00  from holding Alpha Copper Corp or generate 115.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Northern Graphite  vs.  Alpha Copper Corp

Northern Graphite

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Alpha Copper Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Copper Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alpha Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern Graphite and Alpha Copper

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

The idea behind Northern Graphite and Alpha 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.