Correlation Between Iluka Resources and Aftermath Silver

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

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

Diversification Opportunities for Iluka Resources and Aftermath Silver

0.32

Correlation Coefficient

Iluka Resources  Aftermath Silver

Weak diversification

The 3 months correlation between Iluka and Aftermath is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources Ltd and Aftermath Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermath Silver and Iluka 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 Iluka Resources Ltd are associated (or correlated) with Aftermath Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermath Silver has no effect on the direction of Iluka Resources i.e., Iluka Resources and Aftermath Silver go up and down completely randomly.

Pair Corralation between Iluka Resources and Aftermath Silver

Assuming the 90 days horizon Iluka Resources Ltd is expected to under-perform the Aftermath Silver. But the pink sheet apears to be less risky and, when comparing its historical volatility, Iluka Resources Ltd is 1.71 times less risky than Aftermath Silver. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Aftermath Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Aftermath Silver on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Aftermath Silver or generate 17.86% return on investment over 90 days.

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

Iluka Resources Ltd  vs.  Aftermath Silver

Iluka Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iluka Resources Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aftermath Silver

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aftermath Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Aftermath Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iluka Resources and Aftermath Silver

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

The idea behind Iluka Resources Ltd and Aftermath Silver 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.