Correlation Between IGO and Surge Copper

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

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

Diversification Opportunities for IGO and Surge Copper

-0.81

Correlation Coefficient

IGO  Surge Copper

Pay attention - limited upside

The 3 months correlation between IGO and Surge is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding IGO Limited and Surge Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Copper Corp and IGO 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 IGO Limited are associated (or correlated) with Surge Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Copper Corp has no effect on the direction of IGO i.e., IGO and Surge Copper go up and down completely randomly.

Pair Corralation between IGO and Surge Copper

Assuming the 90 days horizon IGO Limited is expected to under-perform the Surge Copper. But the pink sheet apears to be less risky and, when comparing its historical volatility, IGO Limited is 1.76 times less risky than Surge Copper. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Surge Copper Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Surge Copper Corp on September 12, 2024 and sell it today you would lose (0.65) from holding Surge Copper Corp or give up 8.67% of portfolio value over 90 days.

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

IGO Limited  vs.  Surge Copper Corp

IGO Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IGO Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, IGO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Surge Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with IGO and Surge Copper

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

The idea behind IGO Limited and Surge 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.