Correlation Between Central Asia and Atalaya Mining

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

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

Diversification Opportunities for Central Asia and Atalaya Mining

0.89

Correlation Coefficient

Central Asia  Atalaya Mining

Very poor diversification

The 3 months correlation between Central and Atalaya is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining and Central Asia 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 Central Asia Metals are associated (or correlated) with Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of Central Asia i.e., Central Asia and Atalaya Mining go up and down completely randomly.

Pair Corralation between Central Asia and Atalaya Mining

Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Atalaya Mining. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.41 times less risky than Atalaya Mining. The stock trades about -0.08 of its potential returns per unit of risk. The Atalaya Mining is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  38,700  in Atalaya Mining on August 30, 2024 and sell it today you would lose (3,600) from holding Atalaya Mining or give up 9.3% of portfolio value over 90 days.

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

Central Asia Metals  vs.  Atalaya Mining

Central Asia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Asia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Central Asia and Atalaya Mining

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

The idea behind Central Asia Metals and Atalaya Mining 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.