Why Has Rio Tinto Stock Seen Weakness In The Last One Month?

Ukraine – 20 March 2019: A Rio Tinto plc company emblem is seen on a… [+] smart phone in this photo illustration. (Photo courtesy of Getty Images/Igor Golovniov/SOPA Images/LightRocket)
Getty Images/LightRocket
The stock of Rio Tinto (NYSE: RIO) has lost more than 5% in the previous month and is now trading at little under $84 per share. During this time, commodities prices were often sluggish, which contributed to the drop. Metals prices had previously soared in response to China’s strong recovery following the pandemic, and authorities suspect that speculative activities are being used to maintain prices high. As a result, China has said that it will crack down on stockpiling and monopolies while focusing on attempts to bring commodity prices down. China’s National Food and Strategic Reserves Administration has declared that metal from its stockpile will be released in phases in the near future. In addition, despite Republican resistance, US President Joe Biden has recommended reducing his spending proposal from $2.25 trillion to $1.7 trillion. This has caused instability in global commodities markets, causing some of the world’s largest mining companies, such as Rio Tinto, to lose value. Will RIO stock continue to fall in the coming weeks, or is a rebound more likely? According to the Trefis Machine Learning Engine, which finds trends in a company’s stock price data over the last ten years, RIO stock returns are expected to be close to 3% in the next three months (63 trading days), following a 5% fall in the previous one-month (21 trading days). But how do these figures vary if you want to hold RIO stock for a shorter or longer period of time? On the Trefis Machine Learning, you may test the response and many other combinations to see if RIO stock would rise following a dip and vice versa. You can evaluate the likelihood of recovery across time intervals of a quarter, month, or even a single day!
TRY THE MACHINE LEARNING ENGINE FOR YOURSELF:
IF RIO stock moves -5 percent in five trading days, THEN RIO stock moves an average of 2.5 percent in the next 21 trading days, with a 56 percent chance of rising in the next month.

Trefis Average Return
Making Sense of RIO Stock Movements: Some Fun Scenarios, FAQs, and Making Sense of RIO Stock Movements:
Question 1: Is Rio Tinto stock’s average return higher following a drop?
ADDITIONAL INFORMATION FOR YOU
Answer:
Consider the following two scenarios: Case 1: Rio Tinto’s stock drops by 5% or more in a week.
Case 2: Rio Tinto’s stock gains 5% or more in a week.
Is the average return on Rio Tinto shares after Case 1 or Case 2 higher in the following month?
After Case 1 (where the stock has just suffered a 5% loss over the previous week), RIO stock performs better, with an average return of 2.5 percent over the next month (21 trading days) versus a return of -0.7 percent in Case 2 (where the stock has just suffered a 5% loss over the previous week).
In example, the S&P 500 has an average return of 3.1 percent in Case 1 and barely 0.5 percent in Case 2 over the next 21 trading days, according to our dashboard, which shows the average return for the S&P 500 after a decline or rise.
Use the Trefis machine learning engine to understand how Rio Tinto stock is likely to react following any specific gain or loss over time.
Question 2: Does it pay to be patient?
Answer: If you buy and hold Rio Tinto shares, you may anticipate near-term swings to fade away with time, and a long-term favorable trend to favor you – at least if the company is otherwise healthy.
Overall, facts and Trefis’ machine learning engine estimates show that patience pays off in most stocks!
The following table shows the returns for RIO stock over the next N days after a -5 percent shift over the previous 5 trading days, as well as the returns for the S&P500:

Trefis Average Return
Question 3: If you wait a bit following a climb, what is the average return?
Answer: As mentioned in the preceding question, the average return after a rise is lower than after a decrease. Surprisingly, most equities would be better avoided as short-term investments if they had gained in the previous few days.
The table below shows RIO’s returns over the next N days after a 5% shift over the previous 5 trading days, as well as the S&P500’s returns:

Trefis Average Return
By adjusting the variables in the charts above, you can test the trend for Rio Tinto stock for yourself.
While the price of RIO has changed, the year 2020 has produced numerous pricing discontinuities that could provide lucrative trading opportunities. You’ll be shocked to see how the stock valuation of Compass Minerals vs. Southwest Gas differs from their respective operational growth. Many similar discontinuous pairs can be found here.
Here you may find all of Trefis’ Featured Analyses and Trefis Data./nRead More