Correlation Between Ero Copper and Alphamin Res

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

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

Diversification Opportunities for Ero Copper and Alphamin Res

0.53

Correlation Coefficient

Ero Copper  Alphamin Res

Very weak diversification

The 3 months correlation between Ero and Alphamin is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Alphamin Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphamin Res and Ero 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 Ero Copper Corp are associated (or correlated) with Alphamin Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphamin Res has no effect on the direction of Ero Copper i.e., Ero Copper and Alphamin Res go up and down completely randomly.

Pair Corralation between Ero Copper and Alphamin Res

Assuming the 90 days trading horizon Ero Copper Corp is expected to generate 0.38 times more return on investment than Alphamin Res. However, Ero Copper Corp is 2.66 times less risky than Alphamin Res. It trades about -0.03 of its potential returns per unit of risk. Alphamin Res is currently generating about -0.12 per unit of risk. If you would invest  1,913  in Ero Copper Corp on December 29, 2024 and sell it today you would lose (161.00) from holding Ero Copper Corp or give up 8.42% of portfolio value over 90 days.

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

Ero Copper Corp  vs.  Alphamin Res

Ero Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ero Copper Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ero Copper is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alphamin Res

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphamin Res has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ero Copper and Alphamin Res

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

The idea behind Ero Copper Corp and Alphamin Res 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.

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.