Correlation Between Atico Mining and Geodrill

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

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

Diversification Opportunities for Atico Mining and Geodrill

0.7

Correlation Coefficient

Atico Mining  Geodrill

Poor diversification

The 3 months correlation between Atico and Geodrill is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Atico Mining and Geodrill Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geodrill Limited and Atico Mining 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 Atico Mining are associated (or correlated) with Geodrill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geodrill Limited has no effect on the direction of Atico Mining i.e., Atico Mining and Geodrill go up and down completely randomly.

Pair Corralation between Atico Mining and Geodrill

Assuming the 90 days horizon Atico Mining is expected to generate 8.14 times more return on investment than Geodrill. However, Atico Mining is 8.14 times more volatile than Geodrill Limited. It trades about 0.07 of its potential returns per unit of risk. Geodrill Limited is currently generating about -0.03 per unit of risk. If you would invest  7.00  in Atico Mining on December 29, 2024 and sell it today you would lose (1.80) from holding Atico Mining or give up 25.71% of portfolio value over 90 days.

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

Atico Mining  vs.  Geodrill Limited

Atico Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atico Mining are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Atico Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Geodrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geodrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Geodrill is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Atico Mining and Geodrill

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

The idea behind Atico Mining and Geodrill Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.