Correlation Between Teck Resources and Sierra Metals

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

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

Diversification Opportunities for Teck Resources and Sierra Metals

0.0

Correlation Coefficient

Teck Resources  Sierra Metals

Pay attention - limited upside

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

Pair Corralation between Teck Resources and Sierra Metals

If you would invest (100.00) in Sierra Metals on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Sierra Metals or generate -100.0% return on investment over 90 days.

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

Teck Resources Ltd  vs.  Sierra Metals

Teck Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teck Resources Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Teck Resources is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Teck Resources and Sierra Metals

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

The idea behind Teck Resources Ltd and Sierra Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.