Correlation Between North American and Marimaca Copper

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

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

Diversification Opportunities for North American and Marimaca Copper

-0.43

Correlation Coefficient

North American  Marimaca Copper

Very good diversification

The 3 months correlation between North and Marimaca is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction 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 North American 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 North American Construction 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 North American i.e., North American and Marimaca Copper go up and down completely randomly.

Pair Corralation between North American and Marimaca Copper

Assuming the 90 days trading horizon North American Construction is expected to under-perform the Marimaca Copper. But the stock apears to be less risky and, when comparing its historical volatility, North American Construction is 1.32 times less risky than Marimaca Copper. The stock trades about -0.29 of its potential returns per unit of risk. The Marimaca Copper Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  530.00  in Marimaca Copper Corp on December 2, 2024 and sell it today you would earn a total of  6.00  from holding Marimaca Copper Corp or generate 1.13% return on investment over 90 days.

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

North American Construction  vs.  Marimaca Copper Corp

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Marimaca Copper Corp

Risk-Adjusted Performance

Modest

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. 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 North American and Marimaca Copper

The main advantage of trading using opposite North American and Marimaca Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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 North American Construction 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.