With the iron ore price dropping 35%, how is Rio Tinto’s inventory doing?

Rio Tinto share (NYSE: RIO) has fallen more than 11% in the past month and is currently trading at $ 76 per share. The recent decline in the stock was caused by a sharp drop in world iron ore prices. The price of iron ore per dry metric ton fell nearly 35%, from over $ 220 in July 2021 to less than $ 145 in early September 2021, mainly due to lower imports from China following its decision to control steel production to meet carbon emission standards. China had asked 20 steel mills in Tangshan city to suspend operations for a week in August in order to cut emissions, because China’s steel industry accounts for 15% of the country’s total carbon emissions. In addition, China’s iron ore imports fell to 88.51 million metric tons in July 2021, from 89.41 million metric tons in June 2021. This figure is well below 102.1 million tons. metrics recorded in March 2021. With the efforts to control steel production, demand for the key raw material - iron ore - from China has been hit hard, causing prices to drop sharply. However, there was a slight recovery with Chinese iron ore imports reaching 97.5 million metric tonnes in August 2021.

But, after the recent drop, will RIO’s stock continue on its downward trajectory over the next several weeks, or is a stock rally more likely? According to the machine learning engine Trefis, which identifies trends in a company’s stock price data over the past ten years, RIO stock returns on average more than 7% then three months (63 trading days) period after experiencing an 11% drop in the previous one-month period (21 trading days). The stock has a more than 70% chance of increasing over the next three months. But how would those numbers change if you wanted to hold RIO shares for a longer or shorter period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test RIO stock has chances of a rise after a fall and vice versa. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!

MACHINE LEARNING MOTOR - try it yourself:

IF The RIO share has moved by -5% over five trading days, SO Over the next 21 trading days, the RIO share moves an average of 2.7%, with a 57% chance of a positive return.

Some fun scenarios, FAQs and explanation of RIO stock moves:

Question 1: Is the average return on Rio Tinto shares higher after a decline?

Reply:

Consider two situations,

Case 1: Rio Tinto shares fall -5% or more in a week

Case 2: Rio Tinto’s share increases by 5% or more in a week

Is the average return on Rio Tinto shares higher in the next month after Case 1 or Case 2?

RIO actions fares better after case 1, with an average yield of 2.7% during the following month (21 trading days) in case 1 (where the stock has just suffered a loss of 5% during the previous week), against an average return of -0.6% for case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in case 1, and an average return of only 0.5% for case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how the Rio Tinto stock is likely to behave after a specific gain or loss over a period of time.

Question 2: Does patience pay?

Reply:

If you buy and hold stock in Rio Tinto, it is expected that over time short-term fluctuations will cancel each other out and the positive long-term trend will be in your favor - at least if the company is. otherwise solid.

All in all, according to data and calculations from the machine learning engine Trefis, patience absolutely pays for most actions!

For RIO stock, returns over the following N days after a variation of -5% over the last five trading days is detailed in the table below, along with the returns of the S & P500:

Question 3: What about the average return after a rise if you wait a while?

Reply:

The average return after a rise is naturally lower than that after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks.

RIO’s feedback over the next N days after a variation of 5% over the last five trading days is detailed in the table below, along with the returns of the S & P500:

It is powerful enough to test the trend of Rio Tinto stocks yourself by changing the entries in the charts above.

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