Correlation Between Palamina Corp and Antioquia Gold

Can any of the company-specific risk be diversified away by investing in both Palamina Corp and Antioquia Gold 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 Palamina Corp and Antioquia Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Palamina Corp and Antioquia Gold

-0.58

Correlation Coefficient

Palamina Corp  Antioquia Gold

Excellent diversification

The 3 months correlation between Palamina and Antioquia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Palamina Corp and Antioquia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antioquia Gold and Palamina Corp 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 Palamina Corp are associated (or correlated) with Antioquia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antioquia Gold has no effect on the direction of Palamina Corp i.e., Palamina Corp and Antioquia Gold go up and down completely randomly.

Pair Corralation between Palamina Corp and Antioquia Gold

Assuming the 90 days horizon Palamina Corp is expected to generate 110.12 times less return on investment than Antioquia Gold. But when comparing it to its historical volatility, Palamina Corp is 1.37 times less risky than Antioquia Gold. It trades about 0.0 of its potential returns per unit of risk. Antioquia Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Antioquia Gold on September 4, 2024 and sell it today you would earn a total of  0.90  from holding Antioquia Gold or generate 81.82% return on investment over 90 days.

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

Palamina Corp  vs.  Antioquia Gold

Palamina Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Antioquia Gold

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antioquia Gold are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Antioquia Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palamina Corp and Antioquia Gold

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

The idea behind Palamina Corp and Antioquia Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.