Correlation Between Faraday Copper and K92 Mining
Can any of the company-specific risk be diversified away by investing in both Faraday Copper and K92 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 K92 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 K92 Mining, you can compare the effects of market volatilities on Faraday Copper and K92 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 K92 Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Copper and K92 Mining.
Diversification Opportunities for Faraday Copper and K92 Mining
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Faraday and K92 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Copper Corp and K92 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K92 Mining 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 K92 Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K92 Mining has no effect on the direction of Faraday Copper i.e., Faraday Copper and K92 Mining go up and down completely randomly.
Pair Corralation between Faraday Copper and K92 Mining
Assuming the 90 days trading horizon Faraday Copper Corp is expected to under-perform the K92 Mining. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Copper Corp is 1.35 times less risky than K92 Mining. The stock trades about -0.07 of its potential returns per unit of risk. The K92 Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 915.00 in K92 Mining on August 28, 2024 and sell it today you would lose (11.00) from holding K92 Mining or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Copper Corp vs. K92 Mining
Performance |
| Timeline |
| Faraday Copper Corp |
| K92 Mining |
Faraday Copper and K92 Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Copper and K92 Mining
The main advantage of trading using opposite Faraday Copper and K92 Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Copper position performs unexpectedly, K92 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 K92 Mining will offset losses from the drop in K92 Mining's long position.The idea behind Faraday Copper Corp and K92 Mining 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.| K92 Mining vs. Calibre Mining Corp | K92 Mining vs. Wesdome Gold Mines | K92 Mining vs. Equinox Gold Corp | K92 Mining vs. Orla Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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