Correlation Between Ero Copper and Capstone Copper

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

Diversification Opportunities for Ero Copper and Capstone Copper

0.87

Correlation Coefficient

Ero Copper  Capstone Copper

Very poor diversification

The 3 months correlation between Ero and Capstone is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ero Copper Corp and Capstone Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Copper Corp 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 Capstone Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Copper Corp has no effect on the direction of Ero Copper i.e., Ero Copper and Capstone Copper go up and down completely randomly.

Pair Corralation between Ero Copper and Capstone Copper

Considering the 90-day investment horizon Ero Copper is expected to generate 1.56 times less return on investment than Capstone Copper. In addition to that, Ero Copper is 1.24 times more volatile than Capstone Copper Corp. It trades about 0.06 of its total potential returns per unit of risk. Capstone Copper Corp is currently generating about 0.12 per unit of volatility. If you would invest  480.00  in Capstone Copper Corp on April 30, 2025 and sell it today you would earn a total of  92.00  from holding Capstone Copper Corp or generate 19.17% return on investment over 90 days.

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

Ero Copper Corp  vs.  Capstone Copper Corp

Ero Copper Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ero Copper Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ero Copper displayed solid returns over the last few months and may actually be approaching a breakup point.

Capstone Copper Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Copper Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Capstone Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ero Copper and Capstone Copper

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

The idea behind Ero Copper Corp and Capstone 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.