Correlation Between Batero Gold and First Majestic

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

By analyzing existing cross correlation between Batero Gold Corp and First Majestic Silver, you can compare the effects of market volatilities on Batero Gold and First Majestic 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 Batero Gold with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batero Gold and First Majestic.

Diversification Opportunities for Batero Gold and First Majestic

0.54

Correlation Coefficient

Batero Gold  First Majestic

Very weak diversification

The 3 months correlation between Batero and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Batero Gold Corp and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Batero Gold 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 Batero Gold Corp are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Batero Gold i.e., Batero Gold and First Majestic go up and down completely randomly.

Pair Corralation between Batero Gold and First Majestic

Assuming the 90 days horizon Batero Gold Corp is expected to under-perform the First Majestic. In addition to that, Batero Gold is 3.61 times more volatile than First Majestic Silver. It trades about -0.16 of its total potential returns per unit of risk. First Majestic Silver is currently generating about -0.11 per unit of volatility. If you would invest  920.00  in First Majestic Silver on October 10, 2024 and sell it today you would lose (70.00) from holding First Majestic Silver or give up 7.61% of portfolio value over 90 days.

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

Batero Gold Corp  vs.  First Majestic Silver

Batero Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batero Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Majestic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Batero Gold and First Majestic

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

The idea behind Batero Gold Corp and First Majestic Silver 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..