Correlation Between Ero Copper and Marimaca Copper

Can any of the company-specific risk be diversified away by investing in both Ero Copper and Marimaca 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 Ero Copper and Marimaca Copper 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 Marimaca Copper Corp, you can compare the effects of market volatilities on Ero Copper and Marimaca 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 Ero Copper with a short position of Marimaca Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ero Copper and Marimaca Copper.

Diversification Opportunities for Ero Copper and Marimaca Copper

-0.81

Correlation Coefficient

Ero Copper  Marimaca Copper

Pay attention - limited upside

The 3 months correlation between Ero and Marimaca is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Marimaca Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimaca Copper Corp 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 Marimaca Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimaca Copper Corp has no effect on the direction of Ero Copper i.e., Ero Copper and Marimaca Copper go up and down completely randomly.

Pair Corralation between Ero Copper and Marimaca Copper

Assuming the 90 days trading horizon Ero Copper Corp is expected to under-perform the Marimaca Copper. But the stock apears to be less risky and, when comparing its historical volatility, Ero Copper Corp is 1.03 times less risky than Marimaca Copper. The stock trades about -0.1 of its potential returns per unit of risk. The Marimaca Copper Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  382.00  in Marimaca Copper Corp on September 1, 2024 and sell it today you would earn a total of  96.00  from holding Marimaca Copper Corp or generate 25.13% return on investment over 90 days.

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

Ero Copper Corp  vs.  Marimaca Copper Corp

Ero Copper Corp

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Marimaca Copper Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Marimaca Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ero Copper and Marimaca Copper

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

The idea behind Ero Copper Corp and Marimaca Copper Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.