Correlation Between Western Copper and Sea

Can any of the company-specific risk be diversified away by investing in both Western Copper and Sea 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 Sea 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 Sea, you can compare the effects of market volatilities on Western Copper and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and Sea.

Diversification Opportunities for Western Copper and Sea

-0.63

Correlation Coefficient

Western Copper  Sea

Excellent diversification

The 3 months correlation between Western and Sea is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Western Copper i.e., Western Copper and Sea go up and down completely randomly.

Pair Corralation between Western Copper and Sea

Considering the 90-day investment horizon Western Copper and is expected to under-perform the Sea. In addition to that, Western Copper is 1.05 times more volatile than Sea. It trades about -0.24 of its total potential returns per unit of risk. Sea is currently generating about -0.04 per unit of volatility. If you would invest  11,368  in Sea on September 20, 2024 and sell it today you would lose (204.00) from holding Sea or give up 1.79% of portfolio value over 90 days.

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

Western Copper and  vs.  Sea

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Sea

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Western Copper and Sea

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

The idea behind Western Copper and and Sea 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.