Correlation Between Sierra Metals and American Battery

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

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

Diversification Opportunities for Sierra Metals and American Battery

0.0

Correlation Coefficient

Sierra Metals  American Battery

Pay attention - limited upside

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

Pair Corralation between Sierra Metals and American Battery

If you would invest  84.00  in American Battery Technology on December 2, 2024 and sell it today you would earn a total of  16.00  from holding American Battery Technology or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sierra Metals  vs.  American Battery Technology

Sierra Metals

Risk-Adjusted Performance

Very Weak

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

American Battery Tec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Battery Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, American Battery unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sierra Metals and American Battery

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

The idea behind Sierra Metals and American Battery Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.