Correlation Between Tarku Resources and Surge Copper

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

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

Diversification Opportunities for Tarku Resources and Surge Copper

-0.06

Correlation Coefficient

Tarku Resources  Surge Copper

Good diversification

The 3 months correlation between Tarku and Surge is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources 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 Tarku 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 Tarku Resources 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 Tarku Resources i.e., Tarku Resources and Surge Copper go up and down completely randomly.

Pair Corralation between Tarku Resources and Surge Copper

Assuming the 90 days horizon Tarku Resources is expected to generate 11.27 times less return on investment than Surge Copper. But when comparing it to its historical volatility, Tarku Resources is 1.25 times less risky than Surge Copper. It trades about 0.01 of its potential returns per unit of risk. Surge Copper Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Surge Copper Corp on December 28, 2024 and sell it today you would earn a total of  1.70  from holding Surge Copper Corp or generate 21.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Tarku Resources  vs.  Surge Copper Corp

Tarku Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tarku Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tarku Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Tarku Resources and Surge Copper

The main advantage of trading using opposite Tarku Resources and Surge Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tarku Resources 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 Tarku Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.