Correlation Between Pacific Ridge and Surge Copper

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

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

Diversification Opportunities for Pacific Ridge and Surge Copper

0.35

Correlation Coefficient

Pacific Ridge  Surge Copper

Weak diversification

The 3 months correlation between Pacific and Surge is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Ridge Exploration 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 Pacific Ridge 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 Pacific Ridge Exploration 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 Pacific Ridge i.e., Pacific Ridge and Surge Copper go up and down completely randomly.

Pair Corralation between Pacific Ridge and Surge Copper

Assuming the 90 days horizon Pacific Ridge is expected to generate 6.78 times less return on investment than Surge Copper. In addition to that, Pacific Ridge is 1.19 times more volatile than Surge Copper Corp. It trades about 0.01 of its total potential returns per unit of risk. Surge Copper Corp is currently generating about 0.05 per unit of volatility. If you would invest  12.00  in Surge Copper Corp on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Surge Copper Corp or generate 8.33% return on investment over 90 days.

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

Pacific Ridge Exploration  vs.  Surge Copper Corp

Pacific Ridge Exploration

Risk-Adjusted Performance

Very Weak

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

Surge Copper Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Surge Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Ridge and Surge Copper

The main advantage of trading using opposite Pacific Ridge and Surge Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Ridge 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 Pacific Ridge Exploration 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.