Correlation Between Triple Flag and Compania

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

By analyzing existing cross correlation between Triple Flag Precious and Compania de Minas, you can compare the effects of market volatilities on Triple Flag and Compania 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 Triple Flag with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triple Flag and Compania.

Diversification Opportunities for Triple Flag and Compania

0.47

Correlation Coefficient

Triple Flag  Compania

Very weak diversification

The 3 months correlation between Triple and Compania is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas and Triple Flag 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 Triple Flag Precious are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Triple Flag i.e., Triple Flag and Compania go up and down completely randomly.

Pair Corralation between Triple Flag and Compania

Given the investment horizon of 90 days Triple Flag is expected to generate 7.73 times less return on investment than Compania. But when comparing it to its historical volatility, Triple Flag Precious is 1.2 times less risky than Compania. It trades about 0.01 of its potential returns per unit of risk. Compania de Minas is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,205  in Compania de Minas on December 2, 2024 and sell it today you would earn a total of  70.00  from holding Compania de Minas or generate 5.81% return on investment over 90 days.

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

Triple Flag Precious  vs.  Compania de Minas

Triple Flag Precious

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Triple Flag is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Compania de Minas

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Compania may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Triple Flag and Compania

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

The idea behind Triple Flag Precious and Compania de Minas 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 CEOs Directory module to screen CEOs from public companies around the world.