Correlation Between Bell Copper and Capstone Copper

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

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

Diversification Opportunities for Bell Copper and Capstone Copper

0.12

Correlation Coefficient

Bell Copper  Capstone Copper

Average diversification

The 3 months correlation between Bell and Capstone is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bell Copper and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp and Bell 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 Bell Copper are associated (or correlated) with Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Bell Copper i.e., Bell Copper and Capstone Copper go up and down completely randomly.

Pair Corralation between Bell Copper and Capstone Copper

Assuming the 90 days horizon Bell Copper is expected to generate 6.64 times more return on investment than Capstone Copper. However, Bell Copper is 6.64 times more volatile than Capstone Copper Corp. It trades about 0.07 of its potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.06 per unit of risk. If you would invest  3.90  in Bell Copper on September 11, 2024 and sell it today you would lose (0.77) from holding Bell Copper or give up 19.74% of portfolio value over 90 days.

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

Bell Copper  vs.  Capstone Copper Corp

Bell Copper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bell Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Bell Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Capstone Copper Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Capstone Copper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bell Copper and Capstone Copper

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

The idea behind Bell Copper and Capstone Copper 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.