Correlation Between Antofagasta PLC and Sovereign Metals
Can any of the company-specific risk be diversified away by investing in both Antofagasta PLC and Sovereign Metals 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 Antofagasta PLC and Sovereign Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Antofagasta PLC and Sovereign Metals, you can compare the effects of market volatilities on Antofagasta PLC and Sovereign Metals 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 Antofagasta PLC with a short position of Sovereign Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta PLC and Sovereign Metals.
Diversification Opportunities for Antofagasta PLC and Sovereign Metals
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Antofagasta and Sovereign is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Sovereign Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Sovereign Metals go up and down completely randomly.
Pair Corralation between Antofagasta PLC and Sovereign Metals
Assuming the 90 days trading horizon Antofagasta PLC is expected to under-perform the Sovereign Metals. But the stock apears to be less risky and, when comparing its historical volatility, Antofagasta PLC is 1.18 times less risky than Sovereign Metals. The stock trades about -0.13 of its potential returns per unit of risk. The Sovereign Metals is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 3,580 in Sovereign Metals on August 25, 2024 and sell it today you would earn a total of 620.00 from holding Sovereign Metals or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Antofagasta PLC vs. Sovereign Metals
Performance |
| Timeline |
| Antofagasta PLC |
| Sovereign Metals |
Antofagasta PLC and Sovereign Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Antofagasta PLC and Sovereign Metals
The main advantage of trading using opposite Antofagasta PLC and Sovereign Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antofagasta PLC position performs unexpectedly, Sovereign Metals 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 Sovereign Metals will offset losses from the drop in Sovereign Metals' long position.| Antofagasta PLC vs. Optima Health plc | Antofagasta PLC vs. Tatton Asset Management | Antofagasta PLC vs. Direct Line Insurance | Antofagasta PLC vs. Eco Animal Health |
| Sovereign Metals vs. Givaudan SA | Sovereign Metals vs. Antofagasta PLC | Sovereign Metals vs. Centamin PLC | Sovereign Metals vs. Atalaya Mining |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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