Correlation Between GDI Integrated and Ero Copper

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

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

Diversification Opportunities for GDI Integrated and Ero Copper

-0.31

Correlation Coefficient

GDI Integrated  Ero Copper

Very good diversification

The 3 months correlation between GDI and Ero is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp and GDI Integrated 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 GDI Integrated are associated (or correlated) with Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of GDI Integrated i.e., GDI Integrated and Ero Copper go up and down completely randomly.

Pair Corralation between GDI Integrated and Ero Copper

Assuming the 90 days trading horizon GDI Integrated is expected to generate 0.65 times more return on investment than Ero Copper. However, GDI Integrated is 1.54 times less risky than Ero Copper. It trades about 0.29 of its potential returns per unit of risk. Ero Copper Corp is currently generating about -0.1 per unit of risk. If you would invest  3,674  in GDI Integrated on October 5, 2024 and sell it today you would earn a total of  326.00  from holding GDI Integrated or generate 8.87% return on investment over 90 days.

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

GDI Integrated  vs.  Ero Copper Corp

GDI Integrated

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with GDI Integrated and Ero Copper

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

The idea behind GDI Integrated and Ero 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.