Correlation Between Azarga Metals and Trilogy Metals

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

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

Diversification Opportunities for Azarga Metals and Trilogy Metals

-0.13

Correlation Coefficient

Azarga Metals  Trilogy Metals

Good diversification

The 3 months correlation between Azarga and Trilogy is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Azarga Metals Corp and Trilogy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trilogy Metals and Azarga Metals 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 Azarga Metals Corp are associated (or correlated) with Trilogy Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trilogy Metals has no effect on the direction of Azarga Metals i.e., Azarga Metals and Trilogy Metals go up and down completely randomly.

Pair Corralation between Azarga Metals and Trilogy Metals

Assuming the 90 days horizon Azarga Metals is expected to generate 1.36 times less return on investment than Trilogy Metals. In addition to that, Azarga Metals is 1.43 times more volatile than Trilogy Metals. It trades about 0.07 of its total potential returns per unit of risk. Trilogy Metals is currently generating about 0.14 per unit of volatility. If you would invest  114.00  in Trilogy Metals on December 29, 2024 and sell it today you would earn a total of  54.00  from holding Trilogy Metals or generate 47.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Azarga Metals Corp  vs.  Trilogy Metals

Azarga Metals Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Azarga Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Azarga Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Trilogy Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trilogy Metals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Trilogy Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Azarga Metals and Trilogy Metals

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

The idea behind Azarga Metals Corp and Trilogy 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.