Correlation Between Alien Metals and Gatos Silver

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

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

Diversification Opportunities for Alien Metals and Gatos Silver

-0.04

Correlation Coefficient

Alien Metals  Gatos Silver

Good diversification

The 3 months correlation between Alien and Gatos is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Gatos Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatos Silver and Alien Metals 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 Alien Metals are associated (or correlated) with Gatos Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatos Silver has no effect on the direction of Alien Metals i.e., Alien Metals and Gatos Silver go up and down completely randomly.

Pair Corralation between Alien Metals and Gatos Silver

Assuming the 90 days horizon Alien Metals is expected to generate 36.34 times more return on investment than Gatos Silver. However, Alien Metals is 36.34 times more volatile than Gatos Silver. It trades about 0.15 of its potential returns per unit of risk. Gatos Silver is currently generating about -0.05 per unit of risk. If you would invest  0.27  in Alien Metals on September 26, 2024 and sell it today you would lose (0.04) from holding Alien Metals or give up 14.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alien Metals  vs.  Gatos Silver

Alien Metals

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alien Metals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Alien Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Gatos Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gatos Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alien Metals and Gatos Silver

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

The idea behind Alien Metals and Gatos Silver 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..