Correlation Between Cooper Metals and Spacetalk
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Spacetalk 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 Cooper Metals and Spacetalk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Spacetalk, you can compare the effects of market volatilities on Cooper Metals and Spacetalk 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 Cooper Metals with a short position of Spacetalk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Spacetalk.
Diversification Opportunities for Cooper Metals and Spacetalk
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cooper and Spacetalk is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Spacetalk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spacetalk and Cooper Metals 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 Cooper Metals are associated (or correlated) with Spacetalk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spacetalk has no effect on the direction of Cooper Metals i.e., Cooper Metals and Spacetalk go up and down completely randomly.
Pair Corralation between Cooper Metals and Spacetalk
Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Spacetalk. But the stock apears to be less risky and, when comparing its historical volatility, Cooper Metals is 2.24 times less risky than Spacetalk. The stock trades about -0.01 of its potential returns per unit of risk. The Spacetalk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Spacetalk on September 20, 2024 and sell it today you would lose (1.00) from holding Spacetalk or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cooper Metals vs. Spacetalk
Performance |
| Timeline |
| Cooper Metals |
| Spacetalk |
Cooper Metals and Spacetalk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Spacetalk
The main advantage of trading using opposite Cooper Metals and Spacetalk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Spacetalk 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 Spacetalk will offset losses from the drop in Spacetalk's long position.| Cooper Metals vs. Northern Star Resources | Cooper Metals vs. Evolution Mining | Cooper Metals vs. Bluescope Steel | Cooper Metals vs. Sandfire Resources NL |
| Spacetalk vs. Accent Resources NL | Spacetalk vs. Hutchison Telecommunications | Spacetalk vs. Energy Resources | Spacetalk vs. Pact Group Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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