Correlation Between Atacama Resources and First Energy
Can any of the company-specific risk be diversified away by investing in both Atacama Resources and First Energy 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 Atacama Resources and First Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atacama Resources International and First Energy Metals, you can compare the effects of market volatilities on Atacama Resources and First Energy 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 Atacama Resources with a short position of First Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atacama Resources and First Energy.
Diversification Opportunities for Atacama Resources and First Energy
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Atacama and First is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Atacama Resources Internationa and First Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Energy Metals and Atacama Resources 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 Atacama Resources International are associated (or correlated) with First Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Energy Metals has no effect on the direction of Atacama Resources i.e., Atacama Resources and First Energy go up and down completely randomly.
Pair Corralation between Atacama Resources and First Energy
Given the investment horizon of 90 days Atacama Resources International is expected to generate 0.88 times more return on investment than First Energy. However, Atacama Resources International is 1.13 times less risky than First Energy. It trades about 0.12 of its potential returns per unit of risk. First Energy Metals is currently generating about -0.07 per unit of risk. If you would invest 0.19 in Atacama Resources International on November 5, 2024 and sell it today you would earn a total of 0.03 from holding Atacama Resources International or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atacama Resources Internationa vs. First Energy Metals
Performance |
| Timeline |
| Atacama Resources |
| First Energy Metals |
Atacama Resources and First Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atacama Resources and First Energy
The main advantage of trading using opposite Atacama Resources and First Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atacama Resources position performs unexpectedly, First Energy 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 First Energy will offset losses from the drop in First Energy's long position.| Atacama Resources vs. Huntsman Exploration | Atacama Resources vs. Aurelia Metals Limited | Atacama Resources vs. Adriatic Metals PLC | Atacama Resources vs. American Helium |
| First Energy vs. MCF Energy | First Energy vs. Hypercharge Networks Corp | First Energy vs. Traction Uranium Corp | First Energy vs. F3 Uranium Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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