Correlation Between Altura Energy and Altex Industries

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

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

Diversification Opportunities for Altura Energy and Altex Industries

0.08

Correlation Coefficient

Altura Energy  Altex Industries

Significant diversification

The 3 months correlation between Altura and Altex is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and Altex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altex Industries and Altura Energy 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 Energy are associated (or correlated) with Altex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altex Industries has no effect on the direction of Altura Energy i.e., Altura Energy and Altex Industries go up and down completely randomly.

Pair Corralation between Altura Energy and Altex Industries

Assuming the 90 days horizon Altura Energy is expected to generate 0.98 times more return on investment than Altex Industries. However, Altura Energy is 1.02 times less risky than Altex Industries. It trades about 0.12 of its potential returns per unit of risk. Altex Industries is currently generating about 0.04 per unit of risk. If you would invest  287.00  in Altura Energy on September 20, 2024 and sell it today you would earn a total of  689.00  from holding Altura Energy or generate 240.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Altura Energy  vs.  Altex Industries

Altura Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Altura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Altex Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altex Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Altex Industries showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altura Energy and Altex Industries

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

The idea behind Altura Energy and Altex Industries 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.