Correlation Between Gladstone Investment and Antofagasta Plc

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

By analyzing existing cross correlation between Gladstone Investment and Antofagasta plc, you can compare the effects of market volatilities on Gladstone Investment and Antofagasta Plc 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 Gladstone Investment with a short position of Antofagasta Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Antofagasta Plc.

Diversification Opportunities for Gladstone Investment and Antofagasta Plc

0.02

Correlation Coefficient

Gladstone Investment  Antofagasta Plc

Significant diversification

The 3 months correlation between Gladstone and Antofagasta is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and Antofagasta plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta plc and Gladstone Investment 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 Gladstone Investment are associated (or correlated) with Antofagasta Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta plc has no effect on the direction of Gladstone Investment i.e., Gladstone Investment and Antofagasta Plc go up and down completely randomly.

Pair Corralation between Gladstone Investment and Antofagasta Plc

Assuming the 90 days horizon Gladstone Investment is expected to generate 6.33 times less return on investment than Antofagasta Plc. But when comparing it to its historical volatility, Gladstone Investment is 1.72 times less risky than Antofagasta Plc. It trades about 0.05 of its potential returns per unit of risk. Antofagasta plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,966  in Antofagasta plc on October 26, 2024 and sell it today you would earn a total of  129.00  from holding Antofagasta plc or generate 6.56% return on investment over 90 days.

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

Gladstone Investment  vs.  Antofagasta plc

Gladstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gladstone Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Antofagasta plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Antofagasta Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gladstone Investment and Antofagasta Plc

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

The idea behind Gladstone Investment and Antofagasta plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.