Correlation Between First Copper and Gold Rain

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

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

Diversification Opportunities for First Copper and Gold Rain

-0.2

Correlation Coefficient

First Copper  Gold Rain

Good diversification

The 3 months correlation between First and Gold is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Copper Technology and Gold Rain Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Rain Enterprises and First 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 First Copper Technology are associated (or correlated) with Gold Rain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Rain Enterprises has no effect on the direction of First Copper i.e., First Copper and Gold Rain go up and down completely randomly.

Pair Corralation between First Copper and Gold Rain

Assuming the 90 days trading horizon First Copper Technology is expected to under-perform the Gold Rain. In addition to that, First Copper is 1.06 times more volatile than Gold Rain Enterprises. It trades about -0.12 of its total potential returns per unit of risk. Gold Rain Enterprises is currently generating about -0.02 per unit of volatility. If you would invest  5,210  in Gold Rain Enterprises on September 26, 2024 and sell it today you would lose (190.00) from holding Gold Rain Enterprises or give up 3.65% of portfolio value over 90 days.

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

First Copper Technology  vs.  Gold Rain Enterprises

First Copper Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Copper Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gold Rain Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Rain Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gold Rain is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Copper and Gold Rain

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

The idea behind First Copper Technology and Gold Rain Enterprises 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.