Correlation Between Faraday Copper and Adventus Mining

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

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

Diversification Opportunities for Faraday Copper and Adventus Mining

0.88

Correlation Coefficient

Faraday Copper  Adventus Mining

Very poor diversification

The 3 months correlation between Faraday and Adventus is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and Adventus Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adventus Mining Corp and Faraday 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 Faraday Copper Corp are associated (or correlated) with Adventus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adventus Mining Corp has no effect on the direction of Faraday Copper i.e., Faraday Copper and Adventus Mining go up and down completely randomly.

Pair Corralation between Faraday Copper and Adventus Mining

Assuming the 90 days trading horizon Faraday Copper Corp is expected to generate 0.87 times more return on investment than Adventus Mining. However, Faraday Copper Corp is 1.15 times less risky than Adventus Mining. It trades about 0.13 of its potential returns per unit of risk. Adventus Mining Corp is currently generating about 0.07 per unit of risk. If you would invest  76.00  in Faraday Copper Corp on March 14, 2024 and sell it today you would earn a total of  6.00  from holding Faraday Copper Corp or generate 7.89% return on investment over 90 days.

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

Faraday Copper Corp  vs.  Adventus Mining Corp

Faraday Copper Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Faraday Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Adventus Mining Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adventus Mining Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Adventus Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Faraday Copper and Adventus Mining

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

The idea behind Faraday Copper Corp and Adventus Mining 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.