Correlation Between Altura Mining and Critical Elements

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

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

Diversification Opportunities for Altura Mining and Critical Elements

0.28

Correlation Coefficient

Altura Mining  Critical Elements

Modest diversification

The 3 months correlation between Altura and Critical is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and Critical Elements in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Elements and Altura Mining 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 Altura Mining Limited are associated (or correlated) with Critical Elements. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Elements has no effect on the direction of Altura Mining i.e., Altura Mining and Critical Elements go up and down completely randomly.

Pair Corralation between Altura Mining and Critical Elements

Assuming the 90 days horizon Altura Mining Limited is expected to generate 26.89 times more return on investment than Critical Elements. However, Altura Mining is 26.89 times more volatile than Critical Elements. It trades about 0.14 of its potential returns per unit of risk. Critical Elements is currently generating about -0.01 per unit of risk. If you would invest  2.20  in Altura Mining Limited on September 14, 2024 and sell it today you would earn a total of  2.47  from holding Altura Mining Limited or generate 112.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Altura Mining Limited  vs.  Critical Elements

Altura Mining Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altura Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Critical Elements

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Critical Elements has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Critical Elements is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altura Mining and Critical Elements

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

The idea behind Altura Mining Limited and Critical Elements 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.