Correlation Between Antofagasta PLC and Ibstock PLC

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

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

Diversification Opportunities for Antofagasta PLC and Ibstock PLC

0.26

Correlation Coefficient

Antofagasta PLC  Ibstock PLC

Modest diversification

The 3 months correlation between Antofagasta and Ibstock is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Ibstock PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibstock PLC and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with Ibstock PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibstock PLC has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Ibstock PLC go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Ibstock PLC

Assuming the 90 days trading horizon Antofagasta PLC is expected to generate 1.52 times more return on investment than Ibstock PLC. However, Antofagasta PLC is 1.52 times more volatile than Ibstock PLC. It trades about -0.13 of its potential returns per unit of risk. Ibstock PLC is currently generating about -0.2 per unit of risk. If you would invest  179,250  in Antofagasta PLC on October 6, 2024 and sell it today you would lose (20,150) from holding Antofagasta PLC or give up 11.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Antofagasta PLC  vs.  Ibstock PLC

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ibstock PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ibstock PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Antofagasta PLC and Ibstock PLC

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

The idea behind Antofagasta PLC and Ibstock PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.