Correlation Between Surge Copper and Mineral Resources

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

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

Diversification Opportunities for Surge Copper and Mineral Resources

0.52

Correlation Coefficient

Surge Copper  Mineral Resources

Very weak diversification

The 3 months correlation between Surge and Mineral is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Surge Copper Corp and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources and Surge 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 Surge Copper Corp are associated (or correlated) with Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Surge Copper i.e., Surge Copper and Mineral Resources go up and down completely randomly.

Pair Corralation between Surge Copper and Mineral Resources

Assuming the 90 days horizon Surge Copper Corp is expected to under-perform the Mineral Resources. In addition to that, Surge Copper is 1.15 times more volatile than Mineral Resources Limited. It trades about -0.07 of its total potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.01 per unit of volatility. If you would invest  2,364  in Mineral Resources Limited on September 12, 2024 and sell it today you would lose (229.00) from holding Mineral Resources Limited or give up 9.69% of portfolio value over 90 days.

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

Surge Copper Corp  vs.  Mineral Resources Limited

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.

Mineral Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mineral Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Surge Copper and Mineral Resources

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

The idea behind Surge Copper Corp and Mineral Resources Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.