Correlation Between Arizona Metals and Rio2

Can any of the company-specific risk be diversified away by investing in both Arizona Metals and Rio2 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 Arizona Metals and Rio2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arizona Metals Corp and Rio2, you can compare the effects of market volatilities on Arizona Metals and Rio2 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 Arizona Metals with a short position of Rio2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Metals and Rio2.

Diversification Opportunities for Arizona Metals and Rio2

-0.52

Correlation Coefficient

Arizona Metals  Rio2

Excellent diversification

The 3 months correlation between Arizona and Rio2 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Metals Corp and Rio2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio2 and Arizona Metals 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 Arizona Metals Corp are associated (or correlated) with Rio2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio2 has no effect on the direction of Arizona Metals i.e., Arizona Metals and Rio2 go up and down completely randomly.

Pair Corralation between Arizona Metals and Rio2

Assuming the 90 days trading horizon Arizona Metals Corp is expected to under-perform the Rio2. In addition to that, Arizona Metals is 1.26 times more volatile than Rio2. It trades about -0.1 of its total potential returns per unit of risk. Rio2 is currently generating about 0.14 per unit of volatility. If you would invest  183.00  in Rio2 on September 1, 2025 and sell it today you would earn a total of  67.00  from holding Rio2 or generate 36.61% return on investment over 90 days.

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

Arizona Metals Corp  vs.  Rio2

Arizona Metals Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Arizona Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in December 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rio2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rio2 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Rio2 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arizona Metals and Rio2

The main advantage of trading using opposite Arizona Metals and Rio2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Metals position performs unexpectedly, Rio2 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 Rio2 will offset losses from the drop in Rio2's long position.

The idea behind Arizona Metals Corp and Rio2 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.