Correlation Between Copperbank Resources and Amerigo Resources

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

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

Diversification Opportunities for Copperbank Resources and Amerigo Resources

0.6

Correlation Coefficient

Copperbank Resources  Amerigo Resources

Poor diversification

The 3 months correlation between Copperbank and Amerigo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Copperbank Resources Corp and Amerigo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amerigo Resources and Copperbank 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 Copperbank Resources Corp are associated (or correlated) with Amerigo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amerigo Resources has no effect on the direction of Copperbank Resources i.e., Copperbank Resources and Amerigo Resources go up and down completely randomly.

Pair Corralation between Copperbank Resources and Amerigo Resources

Assuming the 90 days horizon Copperbank Resources Corp is expected to generate 1.14 times more return on investment than Amerigo Resources. However, Copperbank Resources is 1.14 times more volatile than Amerigo Resources. It trades about 0.09 of its potential returns per unit of risk. Amerigo Resources is currently generating about 0.05 per unit of risk. If you would invest  54.00  in Copperbank Resources Corp on September 3, 2024 and sell it today you would earn a total of  7.00  from holding Copperbank Resources Corp or generate 12.96% return on investment over 90 days.

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

Copperbank Resources Corp  vs.  Amerigo Resources

Copperbank Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Copperbank Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Copperbank Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Amerigo Resources

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Copperbank Resources and Amerigo Resources

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

The idea behind Copperbank Resources Corp and Amerigo Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.