Correlation Between Ternium SA and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Ternium SA and Caledonia 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 Ternium SA and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ternium SA ADR and Caledonia Mining, you can compare the effects of market volatilities on Ternium SA and Caledonia 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 Ternium SA with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ternium SA and Caledonia Mining.
Diversification Opportunities for Ternium SA and Caledonia Mining
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ternium and Caledonia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ternium SA ADR and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Ternium SA 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 Ternium SA ADR are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Ternium SA i.e., Ternium SA and Caledonia Mining go up and down completely randomly.
Pair Corralation between Ternium SA and Caledonia Mining
Allowing for the 90-day total investment horizon Ternium SA is expected to generate 23.13 times less return on investment than Caledonia Mining. But when comparing it to its historical volatility, Ternium SA ADR is 1.2 times less risky than Caledonia Mining. It trades about 0.02 of its potential returns per unit of risk. Caledonia Mining is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Caledonia Mining on November 8, 2024 and sell it today you would earn a total of 118.00 from holding Caledonia Mining or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ternium SA ADR vs. Caledonia Mining
Performance |
| Timeline |
| Ternium SA ADR |
| Caledonia Mining |
Ternium SA and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ternium SA and Caledonia Mining
The main advantage of trading using opposite Ternium SA and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ternium SA position performs unexpectedly, Caledonia 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Ternium SA vs. POSCO Holdings | Ternium SA vs. Steel Dynamics | Ternium SA vs. Gerdau SA ADR | Ternium SA vs. Nucor Corp |
| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty Corp |
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 Positions Ratings module to 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.
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