Correlation Between American Helium and Atacama Resources

Can any of the company-specific risk be diversified away by investing in both American Helium and Atacama Resources 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 American Helium and Atacama Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between American Helium and Atacama Resources International, you can compare the effects of market volatilities on American Helium and Atacama Resources 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 American Helium with a short position of Atacama Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Helium and Atacama Resources.

Diversification Opportunities for American Helium and Atacama Resources

-0.03

Correlation Coefficient

American Helium  Atacama Resources

Good diversification

The 3 months correlation between American and Atacama is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding American Helium and Atacama Resources Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atacama Resources and American Helium 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 American Helium are associated (or correlated) with Atacama Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atacama Resources has no effect on the direction of American Helium i.e., American Helium and Atacama Resources go up and down completely randomly.

Pair Corralation between American Helium and Atacama Resources

Assuming the 90 days horizon American Helium is expected to generate 0.34 times more return on investment than Atacama Resources. However, American Helium is 2.95 times less risky than Atacama Resources. It trades about 0.08 of its potential returns per unit of risk. Atacama Resources International is currently generating about -0.01 per unit of risk. If you would invest  11.00  in American Helium on December 2, 2024 and sell it today you would earn a total of  1.00  from holding American Helium or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

American Helium  vs.  Atacama Resources Internationa

American Helium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in American Helium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, American Helium may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Atacama Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atacama Resources International 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with American Helium and Atacama Resources

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

The idea behind American Helium and Atacama Resources International 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.