Correlation Between Aztec Minerals and Huntsman Exploration

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

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

Diversification Opportunities for Aztec Minerals and Huntsman Exploration

0.41

Correlation Coefficient

Aztec Minerals  Huntsman Exploration

Very weak diversification

The 3 months correlation between Aztec and Huntsman is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aztec Minerals Corp and Huntsman Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntsman Exploration and Aztec Minerals 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 Aztec Minerals Corp are associated (or correlated) with Huntsman Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntsman Exploration has no effect on the direction of Aztec Minerals i.e., Aztec Minerals and Huntsman Exploration go up and down completely randomly.

Pair Corralation between Aztec Minerals and Huntsman Exploration

Assuming the 90 days horizon Aztec Minerals Corp is expected to generate 0.9 times more return on investment than Huntsman Exploration. However, Aztec Minerals Corp is 1.11 times less risky than Huntsman Exploration. It trades about -0.1 of its potential returns per unit of risk. Huntsman Exploration is currently generating about -0.3 per unit of risk. If you would invest  15.00  in Aztec Minerals Corp on September 25, 2024 and sell it today you would lose (3.00) from holding Aztec Minerals Corp or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Aztec Minerals Corp  vs.  Huntsman Exploration

Aztec Minerals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aztec Minerals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aztec Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Huntsman Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntsman Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Aztec Minerals and Huntsman Exploration

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

The idea behind Aztec Minerals Corp and Huntsman 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.