Correlation Between Sovereign Metals and Atalaya Mining

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

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

Diversification Opportunities for Sovereign Metals and Atalaya Mining

0.16

Correlation Coefficient

Sovereign Metals  Atalaya Mining

Average diversification

The 3 months correlation between Sovereign and Atalaya is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sovereign Metals and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining and Sovereign 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 Sovereign Metals are associated (or correlated) with Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of Sovereign Metals i.e., Sovereign Metals and Atalaya Mining go up and down completely randomly.

Pair Corralation between Sovereign Metals and Atalaya Mining

Assuming the 90 days trading horizon Sovereign Metals is expected to generate 6.92 times less return on investment than Atalaya Mining. But when comparing it to its historical volatility, Sovereign Metals is 1.23 times less risky than Atalaya Mining. It trades about 0.03 of its potential returns per unit of risk. Atalaya Mining is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  35,325  in Atalaya Mining on April 20, 2025 and sell it today you would earn a total of  10,175  from holding Atalaya Mining or generate 28.8% return on investment over 90 days.

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

Sovereign Metals  vs.  Atalaya Mining

Sovereign Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sovereign Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Atalaya Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atalaya Mining are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Atalaya Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sovereign Metals and Atalaya Mining

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

The idea behind Sovereign Metals and Atalaya Mining 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.