Correlation Between Atco Mining and Grid Metals

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

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

Diversification Opportunities for Atco Mining and Grid Metals

-0.32

Correlation Coefficient

Atco Mining  Grid Metals

Very good diversification

The 3 months correlation between Atco and Grid is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Atco Mining and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and Atco 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 Atco Mining are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Atco Mining i.e., Atco Mining and Grid Metals go up and down completely randomly.

Pair Corralation between Atco Mining and Grid Metals

Assuming the 90 days horizon Atco Mining is expected to generate 2.1 times more return on investment than Grid Metals. However, Atco Mining is 2.1 times more volatile than Grid Metals Corp. It trades about 0.08 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.02 per unit of risk. If you would invest  1.30  in Atco Mining on September 3, 2024 and sell it today you would earn a total of  0.02  from holding Atco Mining or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Atco Mining  vs.  Grid Metals Corp

Atco Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atco Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Atco Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Grid Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grid Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Atco Mining and Grid Metals

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

The idea behind Atco Mining and Grid Metals Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .