Correlation Between Antofagasta PLC and Alien Metals

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

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

Diversification Opportunities for Antofagasta PLC and Alien Metals

0.46

Correlation Coefficient

Antofagasta PLC  Alien Metals

Very weak diversification

The 3 months correlation between Antofagasta and Alien is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals 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 Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Alien Metals go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Alien Metals

Assuming the 90 days trading horizon Antofagasta PLC is expected to generate 0.41 times more return on investment than Alien Metals. However, Antofagasta PLC is 2.45 times less risky than Alien Metals. It trades about 0.3 of its potential returns per unit of risk. Alien Metals is currently generating about 0.06 per unit of risk. If you would invest  162,150  in Antofagasta PLC on October 24, 2024 and sell it today you would earn a total of  14,150  from holding Antofagasta PLC or generate 8.73% return on investment over 90 days.

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

Antofagasta PLC  vs.  Alien Metals

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Alien Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alien Metals 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Antofagasta PLC and Alien Metals

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

The idea behind Antofagasta PLC and Alien Metals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.