Correlation Between Three Valley and Copper Fox

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

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

Diversification Opportunities for Three Valley and Copper Fox

0.46

Correlation Coefficient

Three Valley  Copper Fox

Very weak diversification

The 3 months correlation between Three and Copper is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Three Valley Copper and Copper Fox Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper Fox Metals and Three Valley 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 Three Valley Copper are associated (or correlated) with Copper Fox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper Fox Metals has no effect on the direction of Three Valley i.e., Three Valley and Copper Fox go up and down completely randomly.

Pair Corralation between Three Valley and Copper Fox

Assuming the 90 days horizon Three Valley Copper is expected to generate 37.6 times more return on investment than Copper Fox. However, Three Valley is 37.6 times more volatile than Copper Fox Metals. It trades about 0.25 of its potential returns per unit of risk. Copper Fox Metals is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Three Valley Copper on September 5, 2024 and sell it today you would earn a total of  0.09  from holding Three Valley Copper or generate 900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Three Valley Copper  vs.  Copper Fox Metals

Three Valley Copper

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Three Valley Copper are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Three Valley reported solid returns over the last few months and may actually be approaching a breakup point.

Copper Fox Metals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copper Fox Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Copper Fox reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Three Valley and Copper Fox

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

The idea behind Three Valley Copper and Copper Fox Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..