Correlation Between Leading Edge and Atco Mining

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Can any of the company-specific risk be diversified away by investing in both Leading Edge and Atco Mining 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 Leading Edge and Atco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Atco Mining, you can compare the effects of market volatilities on Leading Edge and Atco Mining 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 Leading Edge with a short position of Atco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Atco Mining.

Diversification Opportunities for Leading Edge and Atco Mining

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Leading and Atco is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Leading Edge i.e., Leading Edge and Atco Mining go up and down completely randomly.

Pair Corralation between Leading Edge and Atco Mining

Assuming the 90 days horizon Leading Edge is expected to generate 11.69 times less return on investment than Atco Mining. But when comparing it to its historical volatility, Leading Edge Materials is 2.41 times less risky than Atco Mining. It trades about 0.01 of its potential returns per unit of risk. Atco Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.85  in Atco Mining on October 25, 2024 and sell it today you would lose (0.99) from holding Atco Mining or give up 53.51% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Leading Edge Materials  vs.  Atco Mining

 Performance 
       Timeline  
Leading Edge Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Leading Edge Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Atco Mining 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Atco Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Atco Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Leading Edge and Atco Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leading Edge and Atco Mining

The main advantage of trading using opposite Leading Edge and Atco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Atco Mining 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 Atco Mining will offset losses from the drop in Atco Mining's long position.
The idea behind Leading Edge Materials and Atco Mining 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.
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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