Correlation Between First Majestic and Acadian Timber

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

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

Diversification Opportunities for First Majestic and Acadian Timber

0.61

Correlation Coefficient

First Majestic  Acadian Timber

Poor diversification

The 3 months correlation between First and Acadian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Acadian Timber Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadian Timber Corp and First Majestic 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 First Majestic Silver are associated (or correlated) with Acadian Timber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadian Timber Corp has no effect on the direction of First Majestic i.e., First Majestic and Acadian Timber go up and down completely randomly.

Pair Corralation between First Majestic and Acadian Timber

Assuming the 90 days horizon First Majestic is expected to generate 124.25 times less return on investment than Acadian Timber. In addition to that, First Majestic is 4.36 times more volatile than Acadian Timber Corp. It trades about 0.0 of its total potential returns per unit of risk. Acadian Timber Corp is currently generating about 0.06 per unit of volatility. If you would invest  1,735  in Acadian Timber Corp on September 23, 2024 and sell it today you would earn a total of  53.00  from holding Acadian Timber Corp or generate 3.05% return on investment over 90 days.

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

First Majestic Silver  vs.  Acadian Timber Corp

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Majestic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Acadian Timber Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acadian Timber Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Acadian Timber is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with First Majestic and Acadian Timber

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

The idea behind First Majestic Silver and Acadian Timber Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.