Correlation Between Chakana Copper and TRX Gold

Can any of the company-specific risk be diversified away by investing in both Chakana Copper and TRX Gold 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 TRX Gold 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 TRX Gold Corp, you can compare the effects of market volatilities on Chakana Copper and TRX Gold 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 TRX Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chakana Copper and TRX Gold.

Diversification Opportunities for Chakana Copper and TRX Gold

0.7

Correlation Coefficient

Chakana Copper  TRX Gold

Poor diversification

The 3 months correlation between Chakana and TRX is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chakana Copper Corp and TRX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRX Gold Corp 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 TRX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRX Gold Corp has no effect on the direction of Chakana Copper i.e., Chakana Copper and TRX Gold go up and down completely randomly.

Pair Corralation between Chakana Copper and TRX Gold

Assuming the 90 days trading horizon Chakana Copper Corp is expected to generate 13.46 times more return on investment than TRX Gold. However, Chakana Copper is 13.46 times more volatile than TRX Gold Corp. It trades about 0.01 of its potential returns per unit of risk. TRX Gold Corp is currently generating about -0.07 per unit of risk. If you would invest  23.00  in Chakana Copper Corp on December 20, 2024 and sell it today you would lose (11.00) from holding Chakana Copper Corp or give up 47.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Chakana Copper Corp  vs.  TRX Gold Corp

Chakana Copper Corp

Risk-Adjusted Performance

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 fairly abnormal basic indicators, Chakana Copper may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TRX Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRX Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TRX Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Chakana Copper and TRX Gold

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

The idea behind Chakana Copper Corp and TRX Gold 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.