Correlation Between First Majestic and Adamera Minerals

Can any of the company-specific risk be diversified away by investing in both First Majestic and Adamera Minerals 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 Adamera Minerals 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 Adamera Minerals Corp, you can compare the effects of market volatilities on First Majestic and Adamera Minerals 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 Adamera Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Adamera Minerals.

Diversification Opportunities for First Majestic and Adamera Minerals

0.02

Correlation Coefficient

First Majestic  Adamera Minerals

Significant diversification

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

Pair Corralation between First Majestic and Adamera Minerals

Assuming the 90 days horizon First Majestic is expected to generate 13.05 times less return on investment than Adamera Minerals. But when comparing it to its historical volatility, First Majestic Silver is 3.06 times less risky than Adamera Minerals. It trades about 0.01 of its potential returns per unit of risk. Adamera Minerals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Adamera Minerals Corp on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Adamera Minerals Corp or generate 0.0% return on investment over 90 days.

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

First Majestic Silver  vs.  Adamera Minerals 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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Adamera Minerals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adamera Minerals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Adamera Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Adamera Minerals

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

The idea behind First Majestic Silver and Adamera Minerals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.