Correlation Between Chakana Copper and New Pacific

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

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

Diversification Opportunities for Chakana Copper and New Pacific

-0.16

Correlation Coefficient

Chakana Copper  New Pacific

Good diversification

The 3 months correlation between Chakana and New is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chakana Copper Corp and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals and Chakana 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 Chakana Copper Corp are associated (or correlated) with New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Chakana Copper i.e., Chakana Copper and New Pacific go up and down completely randomly.

Pair Corralation between Chakana Copper and New Pacific

Assuming the 90 days trading horizon Chakana Copper Corp is expected to generate 4.73 times more return on investment than New Pacific. However, Chakana Copper is 4.73 times more volatile than New Pacific Metals. It trades about 0.01 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.37 per unit of risk. If you would invest  2.30  in Chakana Copper Corp on September 28, 2024 and sell it today you would lose (0.30) from holding Chakana Copper Corp or give up 13.04% of portfolio value over 90 days.

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

Chakana Copper Corp  vs.  New Pacific Metals

Chakana Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chakana Copper 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.

New Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Chakana Copper and New Pacific

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

The idea behind Chakana Copper Corp and New Pacific Metals 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.