Correlation Between Marimaca Copper and Cool

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

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

Diversification Opportunities for Marimaca Copper and Cool

-0.5

Correlation Coefficient

Marimaca Copper  Cool

Very good diversification

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

Pair Corralation between Marimaca Copper and Cool

Assuming the 90 days horizon Marimaca Copper is expected to generate 2.76 times less return on investment than Cool. In addition to that, Marimaca Copper is 2.19 times more volatile than Cool Company. It trades about 0.06 of its total potential returns per unit of risk. Cool Company is currently generating about 0.35 per unit of volatility. If you would invest  725.00  in Cool Company on October 12, 2024 and sell it today you would earn a total of  96.00  from holding Cool Company or generate 13.24% return on investment over 90 days.

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

Marimaca Copper Corp  vs.  Cool Company

Marimaca Copper Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Marimaca Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Cool Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cool Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental 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 Marimaca Copper and Cool

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

The idea behind Marimaca Copper Corp and Cool Company 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.