Correlation Between Antofagasta Plc and SAFEROADS HLDGS

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

By analyzing existing cross correlation between Antofagasta plc and SAFEROADS HLDGS, you can compare the effects of market volatilities on Antofagasta Plc and SAFEROADS HLDGS 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 Antofagasta Plc with a short position of SAFEROADS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta Plc and SAFEROADS HLDGS.

Diversification Opportunities for Antofagasta Plc and SAFEROADS HLDGS

0.0

Correlation Coefficient

Antofagasta Plc  SAFEROADS HLDGS

Pay attention - limited upside

The 3 months correlation between Antofagasta and SAFEROADS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta plc and SAFEROADS HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFEROADS HLDGS and Antofagasta Plc 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 Antofagasta plc are associated (or correlated) with SAFEROADS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFEROADS HLDGS has no effect on the direction of Antofagasta Plc i.e., Antofagasta Plc and SAFEROADS HLDGS go up and down completely randomly.

Pair Corralation between Antofagasta Plc and SAFEROADS HLDGS

Assuming the 90 days horizon Antofagasta plc is expected to generate 3.93 times more return on investment than SAFEROADS HLDGS. However, Antofagasta Plc is 3.93 times more volatile than SAFEROADS HLDGS. It trades about 0.02 of its potential returns per unit of risk. SAFEROADS HLDGS is currently generating about -0.04 per unit of risk. If you would invest  1,883  in Antofagasta plc on October 4, 2024 and sell it today you would earn a total of  80.00  from holding Antofagasta plc or generate 4.25% return on investment over 90 days.

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

Antofagasta plc  vs.  SAFEROADS HLDGS

Antofagasta plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta plc 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SAFEROADS HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAFEROADS HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SAFEROADS HLDGS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Antofagasta Plc and SAFEROADS HLDGS

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

The idea behind Antofagasta plc and SAFEROADS HLDGS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.