Correlation Between Altius Renewable and Shunfeng International

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

By analyzing existing cross correlation between Altius Renewable Royalties and Shunfeng International Clean, you can compare the effects of market volatilities on Altius Renewable and Shunfeng International 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 Altius Renewable with a short position of Shunfeng International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altius Renewable and Shunfeng International.

Diversification Opportunities for Altius Renewable and Shunfeng International

-0.04

Correlation Coefficient

Altius Renewable  Shunfeng International

Good diversification

The 3 months correlation between Altius and Shunfeng is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Altius Renewable Royalties and Shunfeng International Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shunfeng International and Altius Renewable 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 Altius Renewable Royalties are associated (or correlated) with Shunfeng International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shunfeng International has no effect on the direction of Altius Renewable i.e., Altius Renewable and Shunfeng International go up and down completely randomly.

Pair Corralation between Altius Renewable and Shunfeng International

Assuming the 90 days horizon Altius Renewable Royalties is expected to under-perform the Shunfeng International. But the otc stock apears to be less risky and, when comparing its historical volatility, Altius Renewable Royalties is 14.98 times less risky than Shunfeng International. The otc stock trades about -0.04 of its potential returns per unit of risk. The Shunfeng International Clean is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.27  in Shunfeng International Clean on September 14, 2024 and sell it today you would earn a total of  0.21  from holding Shunfeng International Clean or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Altius Renewable Royalties  vs.  Shunfeng International Clean

Altius Renewable Roy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shunfeng International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shunfeng International Clean are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shunfeng International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altius Renewable and Shunfeng International

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

The idea behind Altius Renewable Royalties and Shunfeng International Clean 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.