Correlation Between Amerigo Resources and Imperial Metals

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

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

Diversification Opportunities for Amerigo Resources and Imperial Metals

0.65

Correlation Coefficient

Amerigo Resources  Imperial Metals

Poor diversification

The 3 months correlation between Amerigo and Imperial is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amerigo Resources and Imperial Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Metals and Amerigo 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 Amerigo Resources are associated (or correlated) with Imperial Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Metals has no effect on the direction of Amerigo Resources i.e., Amerigo Resources and Imperial Metals go up and down completely randomly.

Pair Corralation between Amerigo Resources and Imperial Metals

Assuming the 90 days horizon Amerigo Resources is expected to under-perform the Imperial Metals. But the otc stock apears to be less risky and, when comparing its historical volatility, Amerigo Resources is 1.2 times less risky than Imperial Metals. The otc stock trades about -0.01 of its potential returns per unit of risk. The Imperial Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Imperial Metals on September 5, 2024 and sell it today you would lose (1.00) from holding Imperial Metals or give up 0.65% of portfolio value over 90 days.

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

Amerigo Resources  vs.  Imperial Metals

Amerigo Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amerigo Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Amerigo Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Imperial Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Imperial Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amerigo Resources and Imperial Metals

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

The idea behind Amerigo Resources and Imperial 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.