Correlation Between Ero Copper and Aquagold International

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

Diversification Opportunities for Ero Copper and Aquagold International

0.61

Correlation Coefficient

Ero Copper  Aquagold International

Poor diversification

The 3 months correlation between Ero and Aquagold is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Ero Copper i.e., Ero Copper and Aquagold International go up and down completely randomly.

Pair Corralation between Ero Copper and Aquagold International

Considering the 90-day investment horizon Ero Copper Corp is expected to generate 0.42 times more return on investment than Aquagold International. However, Ero Copper Corp is 2.38 times less risky than Aquagold International. It trades about -0.1 of its potential returns per unit of risk. Aquagold International is currently generating about -0.15 per unit of risk. If you would invest  1,430  in Ero Copper Corp on December 5, 2024 and sell it today you would lose (199.00) from holding Ero Copper Corp or give up 13.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Ero Copper Corp  vs.  Aquagold International

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 weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ero Copper and Aquagold International

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

The idea behind Ero Copper Corp and Aquagold International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.