Correlation Between World Copper and QC Copper

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

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

Diversification Opportunities for World Copper and QC Copper

0.5

Correlation Coefficient

World Copper  QC Copper

Very weak diversification

The 3 months correlation between World and QCCU is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding World Copper and QC Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QC Copper and World 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 World Copper are associated (or correlated) with QC Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QC Copper has no effect on the direction of World Copper i.e., World Copper and QC Copper go up and down completely randomly.

Pair Corralation between World Copper and QC Copper

Assuming the 90 days horizon World Copper is expected to generate 2.64 times more return on investment than QC Copper. However, World Copper is 2.64 times more volatile than QC Copper and. It trades about 0.58 of its potential returns per unit of risk. QC Copper and is currently generating about 0.23 per unit of risk. If you would invest  12.00  in World Copper on February 21, 2024 and sell it today you would earn a total of  19.00  from holding World Copper or generate 158.33% return on investment over 90 days.

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

World Copper  vs.  QC Copper and

World Copper

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in World Copper are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, World Copper showed solid returns over the last few months and may actually be approaching a breakup point.

QC Copper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in QC Copper and are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, QC Copper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with World Copper and QC Copper

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

The idea behind World Copper and QC Copper and 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.