Correlation Between Copper Lake and Azimut Exploration

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

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

Diversification Opportunities for Copper Lake and Azimut Exploration

-0.19

Correlation Coefficient

Copper Lake  Azimut Exploration

Good diversification

The 3 months correlation between Copper and Azimut is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Copper Lake Resources and Azimut Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azimut Exploration and Copper Lake 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 Copper Lake Resources are associated (or correlated) with Azimut Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azimut Exploration has no effect on the direction of Copper Lake i.e., Copper Lake and Azimut Exploration go up and down completely randomly.

Pair Corralation between Copper Lake and Azimut Exploration

Assuming the 90 days horizon Copper Lake Resources is expected to generate 25.03 times more return on investment than Azimut Exploration. However, Copper Lake is 25.03 times more volatile than Azimut Exploration. It trades about 0.25 of its potential returns per unit of risk. Azimut Exploration is currently generating about -0.17 per unit of risk. If you would invest  0.35  in Copper Lake Resources on October 5, 2024 and sell it today you would earn a total of  0.35  from holding Copper Lake Resources or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Copper Lake Resources  vs.  Azimut Exploration

Copper Lake Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Lake Resources are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Copper Lake reported solid returns over the last few months and may actually be approaching a breakup point.

Azimut Exploration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azimut Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Azimut Exploration may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Copper Lake and Azimut Exploration

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

The idea behind Copper Lake Resources and Azimut Exploration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.