Correlation Between Compania Minera and Alta Copper

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

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

Diversification Opportunities for Compania Minera and Alta Copper

0.11

Correlation Coefficient

Compania Minera  Alta Copper

Average diversification

The 3 months correlation between Compania and Alta is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Compania Minera Poderosa and Alta Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta Copper Corp and Compania Minera 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 Compania Minera Poderosa are associated (or correlated) with Alta Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta Copper Corp has no effect on the direction of Compania Minera i.e., Compania Minera and Alta Copper go up and down completely randomly.

Pair Corralation between Compania Minera and Alta Copper

Assuming the 90 days trading horizon Compania Minera Poderosa is expected to generate 0.16 times more return on investment than Alta Copper. However, Compania Minera Poderosa is 6.21 times less risky than Alta Copper. It trades about 0.15 of its potential returns per unit of risk. Alta Copper Corp is currently generating about -0.14 per unit of risk. If you would invest  800.00  in Compania Minera Poderosa on December 24, 2024 and sell it today you would earn a total of  148.00  from holding Compania Minera Poderosa or generate 18.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	30.51%
Values	Daily Returns

Compania Minera Poderosa  vs.  Alta Copper Corp

Compania Minera Poderosa

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compania Minera Poderosa are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Compania Minera sustained solid returns over the last few months and may actually be approaching a breakup point.

Alta Copper Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alta Copper Corp 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 forward 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 Compania Minera and Alta Copper

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

The idea behind Compania Minera Poderosa and Alta 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.