Correlation Between Geodrill and Atico Mining

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

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

Diversification Opportunities for Geodrill and Atico Mining

0.7

Correlation Coefficient

Geodrill  Atico Mining

Poor diversification

The 3 months correlation between Geodrill and Atico is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Geodrill Limited and Atico Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atico Mining and Geodrill 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 Geodrill Limited 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 Geodrill i.e., Geodrill and Atico Mining go up and down completely randomly.

Pair Corralation between Geodrill and Atico Mining

Assuming the 90 days horizon Geodrill Limited is expected to under-perform the Atico Mining. But the otc stock apears to be less risky and, when comparing its historical volatility, Geodrill Limited is 8.14 times less risky than Atico Mining. The otc stock trades about -0.03 of its potential returns per unit of risk. The Atico Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Atico Mining on December 29, 2024 and sell it today you would lose (1.80) from holding Atico Mining or give up 25.71% of portfolio value over 90 days.

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

Geodrill Limited  vs.  Atico Mining

Geodrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geodrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Geodrill is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Atico Mining

Risk-Adjusted Performance

Modest

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

Pair Trading with Geodrill and Atico Mining

The main advantage of trading using opposite Geodrill and Atico Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geodrill 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 Geodrill Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.