Correlation Between Surge Copper and Rover Metals

Can any of the company-specific risk be diversified away by investing in both Surge Copper and Rover Metals 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 Rover Metals 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 Rover Metals Corp, you can compare the effects of market volatilities on Surge Copper and Rover Metals 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 Rover Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surge Copper and Rover Metals.

Diversification Opportunities for Surge Copper and Rover Metals

0.73

Correlation Coefficient

Surge Copper  Rover Metals

Poor diversification

The 3 months correlation between Surge and Rover is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Surge Copper Corp and Rover Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rover Metals Corp 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 Rover Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rover Metals Corp has no effect on the direction of Surge Copper i.e., Surge Copper and Rover Metals go up and down completely randomly.

Pair Corralation between Surge Copper and Rover Metals

Assuming the 90 days trading horizon Surge Copper Corp is expected to under-perform the Rover Metals. But the stock apears to be less risky and, when comparing its historical volatility, Surge Copper Corp is 2.35 times less risky than Rover Metals. The stock trades about -0.03 of its potential returns per unit of risk. The Rover Metals Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Rover Metals Corp on September 27, 2024 and sell it today you would lose (1.00) from holding Rover Metals Corp or give up 50.0% of portfolio value over 90 days.

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

Surge Copper Corp  vs.  Rover Metals Corp

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. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Rover Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rover Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Surge Copper and Rover Metals

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

The idea behind Surge Copper Corp and Rover Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.