Correlation Between Rheinmetall and Atalaya Mining

Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Atalaya 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 Rheinmetall and Atalaya Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rheinmetall AG and Atalaya Mining, you can compare the effects of market volatilities on Rheinmetall and Atalaya 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 Rheinmetall with a short position of Atalaya Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Atalaya Mining.

Diversification Opportunities for Rheinmetall and Atalaya Mining

-0.6

Correlation Coefficient

Rheinmetall  Atalaya Mining

Excellent diversification

The 3 months correlation between Rheinmetall and Atalaya is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of Rheinmetall i.e., Rheinmetall and Atalaya Mining go up and down completely randomly.

Pair Corralation between Rheinmetall and Atalaya Mining

Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 0.94 times more return on investment than Atalaya Mining. However, Rheinmetall AG is 1.07 times less risky than Atalaya Mining. It trades about 0.19 of its potential returns per unit of risk. Atalaya Mining is currently generating about 0.12 per unit of risk. If you would invest  60,577  in Rheinmetall AG on October 11, 2024 and sell it today you would earn a total of  4,283  from holding Rheinmetall AG or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Rheinmetall AG  vs.  Atalaya Mining

Rheinmetall AG

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rheinmetall AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rheinmetall unveiled solid returns over the last few months and may actually be approaching a breakup point.

Atalaya Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atalaya Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Atalaya Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rheinmetall and Atalaya Mining

The main advantage of trading using opposite Rheinmetall and Atalaya Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Atalaya 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 Atalaya Mining will offset losses from the drop in Atalaya Mining's long position.

The idea behind Rheinmetall AG and Atalaya 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.