Correlation Between Aftermath Silver and Fathom Nickel

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

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

Diversification Opportunities for Aftermath Silver and Fathom Nickel

0.21

Correlation Coefficient

Aftermath Silver  Fathom Nickel

Modest diversification

The 3 months correlation between Aftermath and Fathom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aftermath Silver and Fathom Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fathom Nickel and Aftermath Silver 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 Aftermath Silver are associated (or correlated) with Fathom Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fathom Nickel has no effect on the direction of Aftermath Silver i.e., Aftermath Silver and Fathom Nickel go up and down completely randomly.

Pair Corralation between Aftermath Silver and Fathom Nickel

Assuming the 90 days horizon Aftermath Silver is expected to generate 0.91 times more return on investment than Fathom Nickel. However, Aftermath Silver is 1.09 times less risky than Fathom Nickel. It trades about 0.1 of its potential returns per unit of risk. Fathom Nickel is currently generating about -0.04 per unit of risk. If you would invest  25.00  in Aftermath Silver on September 11, 2024 and sell it today you would earn a total of  8.00  from holding Aftermath Silver or generate 32.0% return on investment over 90 days.

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

Aftermath Silver  vs.  Fathom Nickel

Aftermath Silver

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aftermath Silver are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aftermath Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Fathom Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fathom Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aftermath Silver and Fathom Nickel

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

The idea behind Aftermath Silver and Fathom Nickel 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.