Correlation Between Capstone Copper and Copperbank Resources

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

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

Diversification Opportunities for Capstone Copper and Copperbank Resources

0.87

Correlation Coefficient

Capstone Copper  Copperbank Resources

Very poor diversification

The 3 months correlation between Capstone and Copperbank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Copper Corp and Copperbank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copperbank Resources Corp and Capstone 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 Capstone Copper Corp are associated (or correlated) with Copperbank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copperbank Resources Corp has no effect on the direction of Capstone Copper i.e., Capstone Copper and Copperbank Resources go up and down completely randomly.

Pair Corralation between Capstone Copper and Copperbank Resources

Assuming the 90 days horizon Capstone Copper is expected to generate 1.4 times less return on investment than Copperbank Resources. But when comparing it to its historical volatility, Capstone Copper Corp is 1.02 times less risky than Copperbank Resources. It trades about 0.12 of its potential returns per unit of risk. Copperbank Resources Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Copperbank Resources Corp on March 2, 2024 and sell it today you would earn a total of  6.00  from holding Copperbank Resources Corp or generate 11.32% return on investment over 90 days.

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

Capstone Copper Corp  vs.  Copperbank Resources Corp

Capstone Copper Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Capstone Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Copperbank Resources Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Copperbank Resources Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Copperbank Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capstone Copper and Copperbank Resources

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

The idea behind Capstone Copper Corp and Copperbank Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.