Correlation Between Atalaya Mining and Rio Tinto

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

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

Diversification Opportunities for Atalaya Mining and Rio Tinto

0.81

Correlation Coefficient

Atalaya Mining  Rio Tinto

Very poor diversification

The 3 months correlation between Atalaya and Rio is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Atalaya Mining and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Atalaya Mining 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 Atalaya Mining are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Atalaya Mining i.e., Atalaya Mining and Rio Tinto go up and down completely randomly.

Pair Corralation between Atalaya Mining and Rio Tinto

Assuming the 90 days trading horizon Atalaya Mining is expected to under-perform the Rio Tinto. In addition to that, Atalaya Mining is 1.36 times more volatile than Rio Tinto PLC. It trades about -0.08 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about -0.02 per unit of volatility. If you would invest  482,950  in Rio Tinto PLC on September 23, 2024 and sell it today you would lose (16,150) from holding Rio Tinto PLC or give up 3.34% of portfolio value over 90 days.

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

Atalaya Mining  vs.  Rio Tinto PLC

Atalaya Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atalaya Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Rio Tinto PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rio Tinto PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Rio Tinto is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atalaya Mining and Rio Tinto

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

The idea behind Atalaya Mining and Rio Tinto PLC 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 Stocks Directory module to find actively traded stocks across global markets.