Correlation Between Sabio Holdings and Northwest Copper

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

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

Diversification Opportunities for Sabio Holdings and Northwest Copper

0.19

Correlation Coefficient

Sabio Holdings  Northwest Copper

Average diversification

The 3 months correlation between Sabio and Northwest is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings and Northwest Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Copper Corp and Sabio Holdings 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 Sabio Holdings are associated (or correlated) with Northwest Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Copper Corp has no effect on the direction of Sabio Holdings i.e., Sabio Holdings and Northwest Copper go up and down completely randomly.

Pair Corralation between Sabio Holdings and Northwest Copper

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 1.1 times more return on investment than Northwest Copper. However, Sabio Holdings is 1.1 times more volatile than Northwest Copper Corp. It trades about 0.37 of its potential returns per unit of risk. Northwest Copper Corp is currently generating about -0.06 per unit of risk. If you would invest  50.00  in Sabio Holdings on December 3, 2024 and sell it today you would earn a total of  26.00  from holding Sabio Holdings or generate 52.0% return on investment over 90 days.

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

Sabio Holdings  vs.  Northwest Copper Corp

Sabio Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Sabio Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Northwest Copper Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Copper Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Northwest Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabio Holdings and Northwest Copper

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

The idea behind Sabio Holdings and Northwest 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.