Correlation Between Minera Alamos and Matador Mining

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

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

Diversification Opportunities for Minera Alamos and Matador Mining

-0.56

Correlation Coefficient

Minera Alamos  Matador Mining

Excellent diversification

The 3 months correlation between Minera and Matador is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Minera Alamos and Matador Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Mining and Minera Alamos 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 Minera Alamos are associated (or correlated) with Matador Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Mining has no effect on the direction of Minera Alamos i.e., Minera Alamos and Matador Mining go up and down completely randomly.

Pair Corralation between Minera Alamos and Matador Mining

Assuming the 90 days horizon Minera Alamos is expected to generate 543.79 times less return on investment than Matador Mining. But when comparing it to its historical volatility, Minera Alamos is 5.05 times less risky than Matador Mining. It trades about 0.0 of its potential returns per unit of risk. Matador Mining Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9.30  in Matador Mining Limited on August 30, 2024 and sell it today you would lose (2.82) from holding Matador Mining Limited or give up 30.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.44%
Values	Daily Returns

Minera Alamos  vs.  Matador Mining Limited

Minera Alamos

Risk-Adjusted Performance

5 of 100

Modest

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

Matador Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Minera Alamos and Matador Mining

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

The idea behind Minera Alamos and Matador Mining Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.