Correlation Between Copper 360 and Frontier Transport

Can any of the company-specific risk be diversified away by investing in both Copper 360 and Frontier Transport 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 360 and Frontier Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Copper 360 and Frontier Transport Holdings, you can compare the effects of market volatilities on Copper 360 and Frontier Transport 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 360 with a short position of Frontier Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copper 360 and Frontier Transport.

Diversification Opportunities for Copper 360 and Frontier Transport

0.04

Correlation Coefficient

Copper 360  Frontier Transport

Significant diversification

The 3 months correlation between Copper and Frontier is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Copper 360 and Frontier Transport Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier Transport and Copper 360 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 360 are associated (or correlated) with Frontier Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Transport has no effect on the direction of Copper 360 i.e., Copper 360 and Frontier Transport go up and down completely randomly.

Pair Corralation between Copper 360 and Frontier Transport

Assuming the 90 days trading horizon Copper 360 is expected to generate 34.14 times more return on investment than Frontier Transport. However, Copper 360 is 34.14 times more volatile than Frontier Transport Holdings. It trades about 0.13 of its potential returns per unit of risk. Frontier Transport Holdings is currently generating about 0.06 per unit of risk. If you would invest  38,000  in Copper 360 on September 3, 2024 and sell it today you would lose (9,000) from holding Copper 360 or give up 23.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.0%
Values	Daily Returns

Copper 360  vs.  Frontier Transport Holdings

Copper 360

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copper 360 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Frontier Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Transport Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Frontier Transport is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Copper 360 and Frontier Transport

The main advantage of trading using opposite Copper 360 and Frontier Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copper 360 position performs unexpectedly, Frontier Transport 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 Frontier Transport will offset losses from the drop in Frontier Transport's long position.

The idea behind Copper 360 and Frontier Transport Holdings 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.