Correlation Between Altus Group and Mullen

Can any of the company-specific risk be diversified away by investing in both Altus Group and Mullen 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 Mullen 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 Mullen Group, you can compare the effects of market volatilities on Altus Group and Mullen 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 Mullen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Group and Mullen.

Diversification Opportunities for Altus Group and Mullen

0.69

Correlation Coefficient

Altus Group  Mullen

Poor diversification

The 3 months correlation between Altus and Mullen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Altus Group Limited and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group 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 Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Altus Group i.e., Altus Group and Mullen go up and down completely randomly.

Pair Corralation between Altus Group and Mullen

Assuming the 90 days trading horizon Altus Group Limited is expected to generate 1.76 times more return on investment than Mullen. However, Altus Group is 1.76 times more volatile than Mullen Group. It trades about 0.35 of its potential returns per unit of risk. Mullen Group is currently generating about 0.14 per unit of risk. If you would invest  5,321  in Altus Group Limited on September 5, 2024 and sell it today you would earn a total of  648.00  from holding Altus Group Limited or generate 12.18% return on investment over 90 days.

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

Altus Group Limited  vs.  Mullen Group

Altus Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Altus Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mullen Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mullen Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Mullen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Altus Group and Mullen

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

The idea behind Altus Group Limited and Mullen Group 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.