Correlation Between Atalaya Mining and Sovereign Metals

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

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

Diversification Opportunities for Atalaya Mining and Sovereign Metals

-0.27

Correlation Coefficient

Atalaya Mining  Sovereign Metals

Very good diversification

The 3 months correlation between Atalaya and Sovereign is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Atalaya Mining and Sovereign Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals 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 Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of Atalaya Mining i.e., Atalaya Mining and Sovereign Metals go up and down completely randomly.

Pair Corralation between Atalaya Mining and Sovereign Metals

Assuming the 90 days trading horizon Atalaya Mining is expected to under-perform the Sovereign Metals. But the stock apears to be less risky and, when comparing its historical volatility, Atalaya Mining is 1.19 times less risky than Sovereign Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Sovereign Metals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,950  in Sovereign Metals on September 12, 2024 and sell it today you would earn a total of  1,000.00  from holding Sovereign Metals or generate 33.9% return on investment over 90 days.

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

Atalaya Mining  vs.  Sovereign Metals

Atalaya Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atalaya Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Atalaya Mining is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sovereign Metals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sovereign Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atalaya Mining and Sovereign Metals

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

The idea behind Atalaya Mining and Sovereign 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.