Correlation Between Scottie Resources and Kodiak Copper

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

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

Diversification Opportunities for Scottie Resources and Kodiak Copper

0.55

Correlation Coefficient

Scottie Resources  Kodiak Copper

Very weak diversification

The 3 months correlation between Scottie and Kodiak is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Scottie Resources Corp and Kodiak Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Copper Corp and Scottie Resources 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 Scottie Resources Corp are associated (or correlated) with Kodiak Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Copper Corp has no effect on the direction of Scottie Resources i.e., Scottie Resources and Kodiak Copper go up and down completely randomly.

Pair Corralation between Scottie Resources and Kodiak Copper

Assuming the 90 days horizon Scottie Resources Corp is expected to under-perform the Kodiak Copper. In addition to that, Scottie Resources is 1.84 times more volatile than Kodiak Copper Corp. It trades about -0.05 of its total potential returns per unit of risk. Kodiak Copper Corp is currently generating about -0.06 per unit of volatility. If you would invest  33.00  in Kodiak Copper Corp on September 12, 2024 and sell it today you would lose (5.00) from holding Kodiak Copper Corp or give up 15.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Scottie Resources Corp  vs.  Kodiak Copper Corp

Scottie Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scottie Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kodiak Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kodiak Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Scottie Resources and Kodiak Copper

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

The idea behind Scottie Resources Corp and Kodiak 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.