Correlation Between Antofagasta PLC and Trellus Health

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

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

Diversification Opportunities for Antofagasta PLC and Trellus Health

0.84

Correlation Coefficient

Antofagasta PLC  Trellus Health

Very poor diversification

The 3 months correlation between Antofagasta and Trellus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Trellus Health go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Trellus Health

Assuming the 90 days trading horizon Antofagasta PLC is expected to generate 0.53 times more return on investment than Trellus Health. However, Antofagasta PLC is 1.88 times less risky than Trellus Health. It trades about -0.11 of its potential returns per unit of risk. Trellus Health plc is currently generating about -0.2 per unit of risk. If you would invest  191,750  in Antofagasta PLC on October 11, 2024 and sell it today you would lose (25,350) from holding Antofagasta PLC or give up 13.22% of portfolio value over 90 days.

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

Antofagasta PLC  vs.  Trellus Health 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.

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health 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.

Pair Trading with Antofagasta PLC and Trellus Health

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

The idea behind Antofagasta PLC and Trellus Health 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.