Correlation Between Australian Strategic and Atco Mining

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

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

Diversification Opportunities for Australian Strategic and Atco Mining

0.14

Correlation Coefficient

Australian Strategic  Atco Mining

Average diversification

The 3 months correlation between Australian and Atco is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining and Australian Strategic 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 Australian Strategic Materials are associated (or correlated) with Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Australian Strategic i.e., Australian Strategic and Atco Mining go up and down completely randomly.

Pair Corralation between Australian Strategic and Atco Mining

Assuming the 90 days horizon Australian Strategic Materials is expected to under-perform the Atco Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Australian Strategic Materials is 5.79 times less risky than Atco Mining. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Atco Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.15  in Atco Mining on December 30, 2024 and sell it today you would earn a total of  0.75  from holding Atco Mining or generate 65.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.25%
Values	Daily Returns

Australian Strategic Materials  vs.  Atco Mining

Australian Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atco Mining

Risk-Adjusted Performance

OK

Over the last 90 days Atco Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly conflicting technical and fundamental indicators, Atco Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Australian Strategic and Atco Mining

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

The idea behind Australian Strategic Materials and Atco Mining 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.