Correlation Between Western Copper and A-Cap Energy

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

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

Diversification Opportunities for Western Copper and A-Cap Energy

-0.47

Correlation Coefficient

Western Copper  A-Cap Energy

Very good diversification

The 3 months correlation between Western and A-Cap is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and A Cap Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Cap Energy and Western 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 Western Copper and are associated (or correlated) with A-Cap Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Cap Energy has no effect on the direction of Western Copper i.e., Western Copper and A-Cap Energy go up and down completely randomly.

Pair Corralation between Western Copper and A-Cap Energy

If you would invest  2.60  in A Cap Energy Limited on September 5, 2024 and sell it today you would earn a total of  0.00  from holding A Cap Energy Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Western Copper and  vs.  A Cap Energy Limited

Western Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Copper and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Western Copper is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

A Cap Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Western Copper and A-Cap Energy

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

The idea behind Western Copper and and A Cap Energy 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.