Correlation Between Euro Manganese and Atico Mining

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

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

Diversification Opportunities for Euro Manganese and Atico Mining

0.62

Correlation Coefficient

Euro Manganese  Atico Mining

Poor diversification

The 3 months correlation between Euro and Atico is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Euro Manganese and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining and Euro Manganese 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 Euro Manganese are associated (or correlated) with Atico Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atico Mining has no effect on the direction of Euro Manganese i.e., Euro Manganese and Atico Mining go up and down completely randomly.

Pair Corralation between Euro Manganese and Atico Mining

Assuming the 90 days horizon Euro Manganese is expected to under-perform the Atico Mining. In addition to that, Euro Manganese is 1.22 times more volatile than Atico Mining. It trades about -0.03 of its total potential returns per unit of risk. Atico Mining is currently generating about 0.01 per unit of volatility. If you would invest  16.00  in Atico Mining on September 16, 2024 and sell it today you would lose (8.00) from holding Atico Mining or give up 50.0% of portfolio value over 90 days.

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

Euro Manganese  vs.  Atico Mining

Euro Manganese

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Euro Manganese are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Euro Manganese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atico Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atico Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Euro Manganese and Atico Mining

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

The idea behind Euro Manganese and Atico 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.