Correlation Between Altus Group and Winpak

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

Diversification Opportunities for Altus Group and Winpak

0.5

Correlation Coefficient

Altus Group  Winpak

Very weak diversification

The 3 months correlation between Altus and Winpak is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Altus Group Limited and Winpak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winpak 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 Winpak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winpak has no effect on the direction of Altus Group i.e., Altus Group and Winpak go up and down completely randomly.

Pair Corralation between Altus Group and Winpak

Assuming the 90 days trading horizon Altus Group Limited is expected to generate 0.99 times more return on investment than Winpak. However, Altus Group Limited is 1.01 times less risky than Winpak. It trades about 0.12 of its potential returns per unit of risk. Winpak is currently generating about 0.11 per unit of risk. If you would invest  5,471  in Altus Group Limited on September 4, 2024 and sell it today you would earn a total of  511.00  from holding Altus Group Limited or generate 9.34% return on investment over 90 days.

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

Altus Group Limited  vs.  Winpak

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 unfluctuating technical and fundamental indicators, Altus Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Winpak

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Winpak are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward-looking signals, Winpak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Altus Group and Winpak

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

The idea behind Altus Group Limited and Winpak 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.