Correlation Between Altair International and Centaurus Metals

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

By analyzing existing cross correlation between Altair International Corp and Centaurus Metals Limited, you can compare the effects of market volatilities on Altair International and Centaurus Metals 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 Altair International with a short position of Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair International and Centaurus Metals.

Diversification Opportunities for Altair International and Centaurus Metals

0.72

Correlation Coefficient

Altair International  Centaurus Metals

Poor diversification

The 3 months correlation between Altair and Centaurus is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and Centaurus Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals and Altair International 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 Altair International Corp are associated (or correlated) with Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Altair International i.e., Altair International and Centaurus Metals go up and down completely randomly.

Pair Corralation between Altair International and Centaurus Metals

Given the investment horizon of 90 days Altair International Corp is expected to generate 2.45 times more return on investment than Centaurus Metals. However, Altair International is 2.45 times more volatile than Centaurus Metals Limited. It trades about 0.0 of its potential returns per unit of risk. Centaurus Metals Limited is currently generating about -0.16 per unit of risk. If you would invest  3.40  in Altair International Corp on October 1, 2024 and sell it today you would lose (0.50) from holding Altair International Corp or give up 14.71% of portfolio value over 90 days.

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

Altair International Corp  vs.  Centaurus Metals Limited

Altair International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Centaurus Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaurus Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Altair International and Centaurus Metals

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

The idea behind Altair International Corp and Centaurus Metals Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.