Correlation Between Altius Minerals and Pampa Metals

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

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

Diversification Opportunities for Altius Minerals and Pampa Metals

-0.51

Correlation Coefficient

Altius Minerals  Pampa Metals

Excellent diversification

The 3 months correlation between Altius and Pampa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Altius Minerals and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals and Altius Minerals 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 Altius Minerals are associated (or correlated) with Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Altius Minerals i.e., Altius Minerals and Pampa Metals go up and down completely randomly.

Pair Corralation between Altius Minerals and Pampa Metals

Assuming the 90 days horizon Altius Minerals is expected to generate 1.66 times less return on investment than Pampa Metals. But when comparing it to its historical volatility, Altius Minerals is 3.84 times less risky than Pampa Metals. It trades about 0.08 of its potential returns per unit of risk. Pampa Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Pampa Metals on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Pampa Metals or generate 0.0% return on investment over 90 days.

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

Altius Minerals  vs.  Pampa Metals

Altius Minerals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altius Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altius Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pampa Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pampa Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altius Minerals and Pampa Metals

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

The idea behind Altius Minerals and Pampa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.