Correlation Between Outcrop Gold and Surge Copper

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

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

Diversification Opportunities for Outcrop Gold and Surge Copper

0.6

Correlation Coefficient

Outcrop Gold  Surge Copper

Poor diversification

The 3 months correlation between Outcrop and Surge is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Outcrop Gold Corp and Surge Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Copper Corp and Outcrop Gold 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 Outcrop Gold Corp are associated (or correlated) with Surge Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Copper Corp has no effect on the direction of Outcrop Gold i.e., Outcrop Gold and Surge Copper go up and down completely randomly.

Pair Corralation between Outcrop Gold and Surge Copper

Assuming the 90 days horizon Outcrop Gold Corp is expected to generate 1.08 times more return on investment than Surge Copper. However, Outcrop Gold is 1.08 times more volatile than Surge Copper Corp. It trades about 0.0 of its potential returns per unit of risk. Surge Copper Corp is currently generating about -0.01 per unit of risk. If you would invest  23.00  in Outcrop Gold Corp on September 29, 2024 and sell it today you would lose (4.00) from holding Outcrop Gold Corp or give up 17.39% of portfolio value over 90 days.

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

Outcrop Gold Corp  vs.  Surge Copper Corp

Outcrop Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Surge Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Surge Copper is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Outcrop Gold and Surge Copper

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

The idea behind Outcrop Gold Corp and Surge 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.