Correlation Between Antofagasta PLC and Helium One

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

By analyzing existing cross correlation between Antofagasta PLC and Helium One Global, you can compare the effects of market volatilities on Antofagasta PLC and Helium One 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 Antofagasta PLC with a short position of Helium One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta PLC and Helium One.

Diversification Opportunities for Antofagasta PLC and Helium One

0.56

Correlation Coefficient

Antofagasta PLC  Helium One

Very weak diversification

The 3 months correlation between Antofagasta and Helium is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Helium One Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helium One Global and Antofagasta PLC 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 Antofagasta PLC are associated (or correlated) with Helium One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helium One Global has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Helium One go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Helium One

Assuming the 90 days trading horizon Antofagasta PLC is expected to under-perform the Helium One. But the stock apears to be less risky and, when comparing its historical volatility, Antofagasta PLC is 1.74 times less risky than Helium One. The stock trades about -0.16 of its potential returns per unit of risk. The Helium One Global is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  109.00  in Helium One Global on September 28, 2024 and sell it today you would lose (13.00) from holding Helium One Global or give up 11.93% of portfolio value over 90 days.

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

Antofagasta PLC  vs.  Helium One Global

Antofagasta PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Helium One Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helium One Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Antofagasta PLC and Helium One

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

The idea behind Antofagasta PLC and Helium One Global 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.