Correlation Between Caledonia Mining and Antofagasta PLC

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

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

Diversification Opportunities for Caledonia Mining and Antofagasta PLC

0.49

Correlation Coefficient

Caledonia Mining  Antofagasta PLC

Very weak diversification

The 3 months correlation between Caledonia and Antofagasta is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Caledonia 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 Caledonia Mining are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Antofagasta PLC go up and down completely randomly.

Pair Corralation between Caledonia Mining and Antofagasta PLC

Assuming the 90 days trading horizon Caledonia Mining is expected to generate 12.22 times less return on investment than Antofagasta PLC. But when comparing it to its historical volatility, Caledonia Mining is 1.1 times less risky than Antofagasta PLC. It trades about 0.0 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  153,514  in Antofagasta PLC on September 13, 2024 and sell it today you would earn a total of  22,786  from holding Antofagasta PLC or generate 14.84% return on investment over 90 days.

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

Caledonia Mining  vs.  Antofagasta PLC

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining 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.

Antofagasta PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Antofagasta PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Caledonia Mining and Antofagasta PLC

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

The idea behind Caledonia Mining and Antofagasta 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.