Correlation Between Iluka Resources and Andean Silver
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Andean Silver 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 Iluka Resources and Andean Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Andean Silver Limited, you can compare the effects of market volatilities on Iluka Resources and Andean Silver 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 Iluka Resources with a short position of Andean Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Andean Silver.
Diversification Opportunities for Iluka Resources and Andean Silver
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iluka and Andean is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Andean Silver Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andean Silver Limited and Iluka 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 Iluka Resources are associated (or correlated) with Andean Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andean Silver Limited has no effect on the direction of Iluka Resources i.e., Iluka Resources and Andean Silver go up and down completely randomly.
Pair Corralation between Iluka Resources and Andean Silver
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Andean Silver. But the stock apears to be less risky and, when comparing its historical volatility, Iluka Resources is 2.74 times less risky than Andean Silver. The stock trades about -0.04 of its potential returns per unit of risk. The Andean Silver Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Andean Silver Limited on September 3, 2024 and sell it today you would earn a total of 74.00 from holding Andean Silver Limited or generate 246.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.17% |
| Values | Daily Returns |
Iluka Resources vs. Andean Silver Limited
Performance |
| Timeline |
| Iluka Resources |
| Andean Silver Limited |
Iluka Resources and Andean Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Andean Silver
The main advantage of trading using opposite Iluka Resources and Andean Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Andean Silver 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 Andean Silver will offset losses from the drop in Andean Silver's long position.| Iluka Resources vs. TTG Fintech | Iluka Resources vs. Genetic Technologies | Iluka Resources vs. Ras Technology Holdings | Iluka Resources vs. Spirit Telecom |
| Andean Silver vs. Northern Star Resources | Andean Silver vs. Evolution Mining | Andean Silver vs. Bluescope Steel | Andean Silver vs. Aneka Tambang Tbk |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |