Correlation Between Volt Lithium and Kutcho Copper

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

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

Diversification Opportunities for Volt Lithium and Kutcho Copper

0.6

Correlation Coefficient

Volt Lithium  Kutcho Copper

Poor diversification

The 3 months correlation between Volt and Kutcho is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Volt Lithium Corp and Kutcho Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kutcho Copper Corp and Volt Lithium 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 Volt Lithium Corp are associated (or correlated) with Kutcho Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kutcho Copper Corp has no effect on the direction of Volt Lithium i.e., Volt Lithium and Kutcho Copper go up and down completely randomly.

Pair Corralation between Volt Lithium and Kutcho Copper

Assuming the 90 days horizon Volt Lithium Corp is expected to under-perform the Kutcho Copper. But the otc stock apears to be less risky and, when comparing its historical volatility, Volt Lithium Corp is 1.07 times less risky than Kutcho Copper. The otc stock trades about -0.37 of its potential returns per unit of risk. The Kutcho Copper Corp is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  7.90  in Kutcho Copper Corp on September 5, 2024 and sell it today you would lose (1.05) from holding Kutcho Copper Corp or give up 13.29% of portfolio value over 90 days.

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

Volt Lithium Corp  vs.  Kutcho Copper Corp

Volt Lithium Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volt Lithium Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential 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.

Kutcho Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kutcho 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 technical and fundamental 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 Volt Lithium and Kutcho Copper

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

The idea behind Volt Lithium Corp and Kutcho 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.