Correlation Between Jiangxi Copper and World Copper
Can any of the company-specific risk be diversified away by investing in both Jiangxi Copper and World Copper 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 Jiangxi Copper and World Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jiangxi Copper and World Copper, you can compare the effects of market volatilities on Jiangxi Copper and World Copper 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 Jiangxi Copper with a short position of World Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Copper and World Copper.
Diversification Opportunities for Jiangxi Copper and World Copper
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jiangxi and World is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Copper and World Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Copper and Jiangxi 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 Jiangxi Copper are associated (or correlated) with World Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Copper has no effect on the direction of Jiangxi Copper i.e., Jiangxi Copper and World Copper go up and down completely randomly.
Pair Corralation between Jiangxi Copper and World Copper
Assuming the 90 days horizon Jiangxi Copper is expected to generate 1.32 times more return on investment than World Copper. However, Jiangxi Copper is 1.32 times more volatile than World Copper. It trades about -0.11 of its potential returns per unit of risk. World Copper is currently generating about -0.15 per unit of risk. If you would invest 196.00 in Jiangxi Copper on September 1, 2024 and sell it today you would lose (38.00) from holding Jiangxi Copper or give up 19.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangxi Copper vs. World Copper
Performance |
| Timeline |
| Jiangxi Copper |
| World Copper |
Jiangxi Copper and World Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangxi Copper and World Copper
The main advantage of trading using opposite Jiangxi Copper and World Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangxi Copper position performs unexpectedly, World Copper 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 World Copper will offset losses from the drop in World Copper's long position.| Jiangxi Copper vs. Hudbay Minerals | Jiangxi Copper vs. Southern Copper | Jiangxi Copper vs. Copper Mountain Mining | Jiangxi Copper vs. Amerigo Resources |
| World Copper vs. Hot Chili Limited | World Copper vs. Three Valley Copper | World Copper vs. Los Andes Copper | World Copper vs. QC Copper and |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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