Correlation Between Altus Group and Boyd Group

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

By analyzing existing cross correlation between Altus Group Limited and Boyd Group Services, you can compare the effects of market volatilities on Altus Group and Boyd Group 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 Altus Group with a short position of Boyd Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Group and Boyd Group.

Diversification Opportunities for Altus Group and Boyd Group

0.18

Correlation Coefficient

Altus Group  Boyd Group

Average diversification

The 3 months correlation between Altus and Boyd is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Altus Group Limited and Boyd Group Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boyd Group Services and Altus Group 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 Altus Group Limited are associated (or correlated) with Boyd Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boyd Group Services has no effect on the direction of Altus Group i.e., Altus Group and Boyd Group go up and down completely randomly.

Pair Corralation between Altus Group and Boyd Group

Assuming the 90 days trading horizon Altus Group is expected to generate 1.33 times less return on investment than Boyd Group. In addition to that, Altus Group is 1.03 times more volatile than Boyd Group Services. It trades about 0.05 of its total potential returns per unit of risk. Boyd Group Services is currently generating about 0.07 per unit of volatility. If you would invest  20,455  in Boyd Group Services on September 21, 2024 and sell it today you would earn a total of  1,047  from holding Boyd Group Services or generate 5.12% return on investment over 90 days.

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

Altus Group Limited  vs.  Boyd Group Services

Altus Group Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Group Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Altus Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Boyd Group Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boyd Group Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Boyd Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Altus Group and Boyd Group

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

The idea behind Altus Group Limited and Boyd Group Services 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 Global Correlations module to find global opportunities by holding instruments from different markets.