Correlation Between Cooper Metals and Talisman Mining
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Talisman 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 Cooper Metals and Talisman Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Talisman Mining, you can compare the effects of market volatilities on Cooper Metals and Talisman 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 Cooper Metals with a short position of Talisman Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Talisman Mining.
Diversification Opportunities for Cooper Metals and Talisman Mining
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cooper and Talisman is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Talisman Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talisman Mining 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 Talisman Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talisman Mining has no effect on the direction of Cooper Metals i.e., Cooper Metals and Talisman Mining go up and down completely randomly.
Pair Corralation between Cooper Metals and Talisman Mining
Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Talisman Mining. But the stock apears to be less risky and, when comparing its historical volatility, Cooper Metals is 1.02 times less risky than Talisman Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Talisman Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Talisman Mining on September 3, 2024 and sell it today you would lose (6.00) from holding Talisman Mining or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Metals vs. Talisman Mining
Performance |
| Timeline |
| Cooper Metals |
| Talisman Mining |
Cooper Metals and Talisman Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Talisman Mining
The main advantage of trading using opposite Cooper Metals and Talisman Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Talisman 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 Talisman Mining will offset losses from the drop in Talisman Mining's long position.| Cooper Metals vs. Richmond Vanadium Technology | Cooper Metals vs. Metro Mining | Cooper Metals vs. Ras Technology Holdings | Cooper Metals vs. Dug Technology |
| Talisman Mining vs. Northern Star Resources | Talisman Mining vs. Evolution Mining | Talisman Mining vs. Bluescope Steel | Talisman Mining vs. Aneka Tambang Tbk |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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