Correlation Between Antofagasta PLC and Zanaga Iron

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

By analyzing existing cross correlation between Antofagasta PLC and Zanaga Iron Ore, you can compare the effects of market volatilities on Antofagasta PLC and Zanaga Iron 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 Zanaga Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Antofagasta PLC and Zanaga Iron.

Diversification Opportunities for Antofagasta PLC and Zanaga Iron

0.27

Correlation Coefficient

Antofagasta PLC  Zanaga Iron

Modest diversification

The 3 months correlation between Antofagasta and Zanaga is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Antofagasta PLC and Zanaga Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zanaga Iron Ore 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 Zanaga Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zanaga Iron Ore has no effect on the direction of Antofagasta PLC i.e., Antofagasta PLC and Zanaga Iron go up and down completely randomly.

Pair Corralation between Antofagasta PLC and Zanaga Iron

Assuming the 90 days trading horizon Antofagasta PLC is expected to generate 0.6 times more return on investment than Zanaga Iron. However, Antofagasta PLC is 1.67 times less risky than Zanaga Iron. It trades about 0.0 of its potential returns per unit of risk. Zanaga Iron Ore is currently generating about -0.12 per unit of risk. If you would invest  175,692  in Antofagasta PLC on September 3, 2024 and sell it today you would lose (4,192) from holding Antofagasta PLC or give up 2.39% of portfolio value over 90 days.

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

Antofagasta PLC  vs.  Zanaga Iron Ore

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 comparatively stable basic indicators, Antofagasta PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Zanaga Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zanaga Iron Ore 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.

Pair Trading with Antofagasta PLC and Zanaga Iron

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

The idea behind Antofagasta PLC and Zanaga Iron Ore 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.