Correlation Between First Majestic and Yield10 Bioscience

Can any of the company-specific risk be diversified away by investing in both First Majestic and Yield10 Bioscience 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 Yield10 Bioscience 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 Yield10 Bioscience, you can compare the effects of market volatilities on First Majestic and Yield10 Bioscience 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 Yield10 Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Yield10 Bioscience.

Diversification Opportunities for First Majestic and Yield10 Bioscience

0.59

Correlation Coefficient

First Majestic  Yield10 Bioscience

Very weak diversification

The 3 months correlation between First and Yield10 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Yield10 Bioscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yield10 Bioscience 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 Yield10 Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yield10 Bioscience has no effect on the direction of First Majestic i.e., First Majestic and Yield10 Bioscience go up and down completely randomly.

Pair Corralation between First Majestic and Yield10 Bioscience

Allowing for the 90-day total investment horizon First Majestic Silver is expected to under-perform the Yield10 Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 24.09 times less risky than Yield10 Bioscience. The stock trades about -0.03 of its potential returns per unit of risk. The Yield10 Bioscience is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Yield10 Bioscience on December 1, 2024 and sell it today you would lose (34.50) from holding Yield10 Bioscience or give up 95.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.33%
Values	Daily Returns

First Majestic Silver  vs.  Yield10 Bioscience

First Majestic Silver

Risk-Adjusted Performance

Very Weak

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

Yield10 Bioscience

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yield10 Bioscience are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Yield10 Bioscience displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Majestic and Yield10 Bioscience

The main advantage of trading using opposite First Majestic and Yield10 Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Yield10 Bioscience 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 Yield10 Bioscience will offset losses from the drop in Yield10 Bioscience's long position.

The idea behind First Majestic Silver and Yield10 Bioscience 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.