Correlation Between Copper Lake and Aztec Minerals

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

Diversification Opportunities for Copper Lake and Aztec Minerals

0.33

Correlation Coefficient

Copper Lake  Aztec Minerals

Weak diversification

The 3 months correlation between Copper and Aztec is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Copper Lake Resources and Aztec Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aztec Minerals Corp 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 Aztec Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aztec Minerals Corp has no effect on the direction of Copper Lake i.e., Copper Lake and Aztec Minerals go up and down completely randomly.

Pair Corralation between Copper Lake and Aztec Minerals

Assuming the 90 days horizon Copper Lake Resources is expected to generate 4.96 times more return on investment than Aztec Minerals. However, Copper Lake is 4.96 times more volatile than Aztec Minerals Corp. It trades about 0.08 of its potential returns per unit of risk. Aztec Minerals Corp is currently generating about 0.01 per unit of risk. If you would invest  9.70  in Copper Lake Resources on October 5, 2024 and sell it today you would lose (9.00) from holding Copper Lake Resources or give up 92.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Copper Lake Resources  vs.  Aztec Minerals Corp

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.

Aztec Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Copper Lake and Aztec Minerals

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

The idea behind Copper Lake Resources and Aztec Minerals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..