Correlation Between Wildsky Resources and Highland Copper

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

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

Diversification Opportunities for Wildsky Resources and Highland Copper

-0.43

Correlation Coefficient

Wildsky Resources  Highland Copper

Very good diversification

The 3 months correlation between Wildsky and Highland is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wildsky Resources and Highland Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Copper and Wildsky 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 Wildsky Resources are associated (or correlated) with Highland Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Copper has no effect on the direction of Wildsky Resources i.e., Wildsky Resources and Highland Copper go up and down completely randomly.

Pair Corralation between Wildsky Resources and Highland Copper

Assuming the 90 days horizon Wildsky Resources is expected to under-perform the Highland Copper. But the stock apears to be less risky and, when comparing its historical volatility, Wildsky Resources is 4.4 times less risky than Highland Copper. The stock trades about -0.13 of its potential returns per unit of risk. The Highland Copper is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Highland Copper on December 21, 2024 and sell it today you would earn a total of  2.50  from holding Highland Copper or generate 33.33% return on investment over 90 days.

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

Wildsky Resources  vs.  Highland Copper

Wildsky Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wildsky Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Highland Copper

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Copper are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Highland Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wildsky Resources and Highland Copper

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

The idea behind Wildsky Resources and Highland Copper 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.