Correlation Between Altair International and Rio Tinto

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

Diversification Opportunities for Altair International and Rio Tinto

0.26

Correlation Coefficient

Altair International  Rio Tinto

Modest diversification

The 3 months correlation between Altair and Rio is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of Altair International i.e., Altair International and Rio Tinto go up and down completely randomly.

Pair Corralation between Altair International and Rio Tinto

Given the investment horizon of 90 days Altair International Corp is expected to under-perform the Rio Tinto. In addition to that, Altair International is 4.79 times more volatile than Rio Tinto Group. It trades about -0.03 of its total potential returns per unit of risk. Rio Tinto Group is currently generating about -0.05 per unit of volatility. If you would invest  6,040  in Rio Tinto Group on September 22, 2024 and sell it today you would lose (225.00) from holding Rio Tinto Group or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Altair International Corp  vs.  Rio Tinto Group

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 very healthy basic indicators, Altair International is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Rio Tinto Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Altair International and Rio Tinto

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

The idea behind Altair International Corp and Rio Tinto 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.