Correlation Between South32 and Atico Mining
Can any of the company-specific risk be diversified away by investing in both South32 and Atico 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 South32 and Atico Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and Atico Mining, you can compare the effects of market volatilities on South32 and Atico 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 South32 with a short position of Atico Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Atico Mining.
Diversification Opportunities for South32 and Atico Mining
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between South32 and Atico is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining and South32 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 South32 Limited are associated (or correlated) with Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of South32 i.e., South32 and Atico Mining go up and down completely randomly.
Pair Corralation between South32 and Atico Mining
Assuming the 90 days horizon South32 is expected to generate 2.03 times less return on investment than Atico Mining. But when comparing it to its historical volatility, South32 Limited is 1.84 times less risky than Atico Mining. It trades about 0.04 of its potential returns per unit of risk. Atico Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.80 in Atico Mining on September 2, 2024 and sell it today you would earn a total of 2.20 from holding Atico Mining or generate 28.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.29% |
| Values | Daily Returns |
South32 Limited vs. Atico Mining
Performance |
| Timeline |
| South32 Limited |
| Atico Mining |
South32 and Atico Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Atico Mining
The main advantage of trading using opposite South32 and Atico Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Atico 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 Atico Mining will offset losses from the drop in Atico Mining's long position.The idea behind South32 Limited and Atico 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.| Atico Mining vs. South32 Limited | Atico Mining vs. NioCorp Developments Ltd | Atico Mining vs. HUMANA INC | Atico Mining vs. SCOR PK |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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