Correlation Between Atalaya Mining and Power Metal

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

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

Diversification Opportunities for Atalaya Mining and Power Metal

0.1

Correlation Coefficient

Atalaya Mining  Power Metal

Average diversification

The 3 months correlation between Atalaya and Power is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Atalaya Mining and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources and Atalaya 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 Atalaya Mining are associated (or correlated) with Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Atalaya Mining i.e., Atalaya Mining and Power Metal go up and down completely randomly.

Pair Corralation between Atalaya Mining and Power Metal

Assuming the 90 days trading horizon Atalaya Mining is expected to generate 0.55 times more return on investment than Power Metal. However, Atalaya Mining is 1.82 times less risky than Power Metal. It trades about 0.02 of its potential returns per unit of risk. Power Metal Resources is currently generating about 0.0 per unit of risk. If you would invest  32,550  in Atalaya Mining on November 27, 2024 and sell it today you would earn a total of  4,800  from holding Atalaya Mining or generate 14.75% return on investment over 90 days.

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

Atalaya Mining  vs.  Power Metal Resources

Atalaya Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atalaya Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Atalaya Mining may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Power Metal Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Power Metal is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atalaya Mining and Power Metal

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

The idea behind Atalaya Mining and Power Metal Resources 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.