Correlation Between Surge Battery and Atco Mining

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

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

Diversification Opportunities for Surge Battery and Atco Mining

-0.2

Correlation Coefficient

Surge Battery  Atco Mining

Good diversification

The 3 months correlation between Surge and Atco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Surge Battery Metals and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco Mining and Surge Battery 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 Surge Battery Metals are associated (or correlated) with Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Surge Battery i.e., Surge Battery and Atco Mining go up and down completely randomly.

Pair Corralation between Surge Battery and Atco Mining

Assuming the 90 days horizon Surge Battery is expected to generate 2.36 times less return on investment than Atco Mining. But when comparing it to its historical volatility, Surge Battery Metals is 2.86 times less risky than Atco Mining. It trades about 0.01 of its potential returns per unit of risk. Atco Mining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Atco Mining on September 11, 2024 and sell it today you would lose (1.00) from holding Atco Mining or give up 43.48% of portfolio value over 90 days.

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

Surge Battery Metals  vs.  Atco Mining

Surge Battery Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Atco Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atco Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain technical and fundamental indicators, Atco Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Surge Battery and Atco Mining

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

The idea behind Surge Battery Metals and Atco 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.