Correlation Between Antofagasta PLC and Thor Mining

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

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

Diversification Opportunities for Antofagasta PLC and Thor Mining

-0.19

Correlation Coefficient

Antofagasta PLC  Thor Mining

Good diversification

The 3 months correlation between Antofagasta and Thor is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Thor Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Mining 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 Thor Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Mining PLC has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Thor Mining go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Thor Mining

Assuming the 90 days trading horizon Antofagasta PLC is expected to generate 0.46 times more return on investment than Thor Mining. However, Antofagasta PLC is 2.16 times less risky than Thor Mining. It trades about 0.02 of its potential returns per unit of risk. Thor Mining PLC is currently generating about -0.04 per unit of risk. If you would invest  148,219  in Antofagasta PLC on September 3, 2024 and sell it today you would earn a total of  22,031  from holding Antofagasta PLC or generate 14.86% return on investment over 90 days.

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

Antofagasta PLC  vs.  Thor Mining 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 comparatively stable basic indicators, Antofagasta PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Thor Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Antofagasta PLC and Thor Mining

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

The idea behind Antofagasta PLC and Thor Mining 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.