Correlation Between Altura Mining and Graphite One

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

Diversification Opportunities for Altura Mining and Graphite One

-0.01

Correlation Coefficient

Altura Mining  Graphite One

Good diversification

The 3 months correlation between Altura and Graphite is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and Graphite One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite One 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 Graphite One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite One has no effect on the direction of Altura Mining i.e., Altura Mining and Graphite One go up and down completely randomly.

Pair Corralation between Altura Mining and Graphite One

Assuming the 90 days horizon Altura Mining Limited is expected to generate 44.98 times more return on investment than Graphite One. However, Altura Mining is 44.98 times more volatile than Graphite One. It trades about 0.1 of its potential returns per unit of risk. Graphite One is currently generating about 0.07 per unit of risk. If you would invest  2.20  in Altura Mining Limited on September 2, 2024 and sell it today you would lose (1.67) from holding Altura Mining Limited or give up 75.91% of portfolio value over 90 days.

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

Altura Mining Limited  vs.  Graphite One

Altura Mining Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 7 (%) 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.

Graphite One

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graphite One are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Graphite One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altura Mining and Graphite One

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

The idea behind Altura Mining Limited and Graphite One 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.