Correlation Between Rio Tinto and Pampa Metals
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Pampa 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 Rio Tinto and Pampa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and Pampa Metals, you can compare the effects of market volatilities on Rio Tinto and Pampa 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 Rio Tinto with a short position of Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Pampa Metals.
Diversification Opportunities for Rio Tinto and Pampa Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rio and Pampa is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals and Rio Tinto 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 Rio Tinto Group are associated (or correlated) with Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Rio Tinto i.e., Rio Tinto and Pampa Metals go up and down completely randomly.
Pair Corralation between Rio Tinto and Pampa Metals
Assuming the 90 days horizon Rio Tinto Group is expected to under-perform the Pampa Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Rio Tinto Group is 2.03 times less risky than Pampa Metals. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Pampa Metals is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Pampa Metals on September 1, 2024 and sell it today you would lose (1.00) from holding Pampa Metals or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto Group vs. Pampa Metals
Performance |
| Timeline |
| Rio Tinto Group |
| Pampa Metals |
Rio Tinto and Pampa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Pampa Metals
The main advantage of trading using opposite Rio Tinto and Pampa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Pampa 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 Pampa Metals will offset losses from the drop in Pampa Metals' long position.| Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Green Shift Commodities | Rio Tinto vs. Glencore PLC | Rio Tinto vs. Electra Battery Materials |
| Pampa Metals vs. Surge Battery Metals | Pampa Metals vs. United Royale Holdings | Pampa Metals vs. Hillcrest Energy Technologies | Pampa Metals vs. Star Alliance International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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