Correlation Between Surge Copper and Nickel Mines

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

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

Diversification Opportunities for Surge Copper and Nickel Mines

-0.14

Correlation Coefficient

Surge Copper  Nickel Mines

Good diversification

The 3 months correlation between Surge and Nickel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Surge Copper Corp and Nickel Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Mines Limited and Surge 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 Surge Copper Corp are associated (or correlated) with Nickel Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Mines Limited has no effect on the direction of Surge Copper i.e., Surge Copper and Nickel Mines go up and down completely randomly.

Pair Corralation between Surge Copper and Nickel Mines

Assuming the 90 days horizon Surge Copper Corp is expected to generate 0.99 times more return on investment than Nickel Mines. However, Surge Copper Corp is 1.01 times less risky than Nickel Mines. It trades about 0.08 of its potential returns per unit of risk. Nickel Mines Limited is currently generating about -0.03 per unit of risk. If you would invest  8.00  in Surge Copper Corp on December 29, 2024 and sell it today you would earn a total of  1.54  from holding Surge Copper Corp or generate 19.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Surge Copper Corp  vs.  Nickel Mines Limited

Surge Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Copper Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Surge Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Nickel Mines Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nickel Mines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Surge Copper and Nickel Mines

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

The idea behind Surge Copper Corp and Nickel Mines Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.