Correlation Between Alphamin Resources and Arafura Resources

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

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

Diversification Opportunities for Alphamin Resources and Arafura Resources

-0.36

Correlation Coefficient

Alphamin Resources  Arafura Resources

Very good diversification

The 3 months correlation between Alphamin and Arafura is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alphamin Resources Corp and Arafura Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arafura Resources and Alphamin Resources 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 Alphamin Resources Corp are associated (or correlated) with Arafura Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arafura Resources has no effect on the direction of Alphamin Resources i.e., Alphamin Resources and Arafura Resources go up and down completely randomly.

Pair Corralation between Alphamin Resources and Arafura Resources

Assuming the 90 days horizon Alphamin Resources Corp is expected to generate 0.35 times more return on investment than Arafura Resources. However, Alphamin Resources Corp is 2.84 times less risky than Arafura Resources. It trades about 0.11 of its potential returns per unit of risk. Arafura Resources is currently generating about -0.04 per unit of risk. If you would invest  68.00  in Alphamin Resources Corp on September 4, 2024 and sell it today you would earn a total of  13.00  from holding Alphamin Resources Corp or generate 19.12% return on investment over 90 days.

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

Alphamin Resources Corp  vs.  Arafura Resources

Alphamin Resources Corp

Risk-Adjusted Performance

8 of 100

OK

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

Arafura Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arafura Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alphamin Resources and Arafura Resources

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

The idea behind Alphamin Resources Corp and Arafura Resources 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.