Correlation Between YPF Sociedad and Northern Minerals

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

By analyzing existing cross correlation between YPF Sociedad Anonima and Northern Minerals Exploration, you can compare the effects of market volatilities on YPF Sociedad and Northern Minerals 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 YPF Sociedad with a short position of Northern Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and Northern Minerals.

Diversification Opportunities for YPF Sociedad and Northern Minerals

0.51

Correlation Coefficient

YPF Sociedad  Northern Minerals

Very weak diversification

The 3 months correlation between YPF and Northern is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and Northern Minerals Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Minerals and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with Northern Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Minerals has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and Northern Minerals go up and down completely randomly.

Pair Corralation between YPF Sociedad and Northern Minerals

Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 0.22 times more return on investment than Northern Minerals. However, YPF Sociedad Anonima is 4.65 times less risky than Northern Minerals. It trades about -0.07 of its potential returns per unit of risk. Northern Minerals Exploration is currently generating about -0.04 per unit of risk. If you would invest  4,264  in YPF Sociedad Anonima on December 27, 2024 and sell it today you would lose (527.00) from holding YPF Sociedad Anonima or give up 12.36% of portfolio value over 90 days.

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

YPF Sociedad Anonima  vs.  Northern Minerals Exploration

YPF Sociedad Anonima

Risk-Adjusted Performance

Very Weak

Over the last 90 days YPF Sociedad Anonima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Northern Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northern Minerals Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with YPF Sociedad and Northern Minerals

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

The idea behind YPF Sociedad Anonima and Northern Minerals Exploration 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.