Correlation Between Altura Energy and Arete Industries

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

Diversification Opportunities for Altura Energy and Arete Industries

0.0

Correlation Coefficient

Altura Energy  Arete Industries

Pay attention - limited upside

The 3 months correlation between Altura and Arete is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and Arete Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arete 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 Arete Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arete Industries has no effect on the direction of Altura Energy i.e., Altura Energy and Arete Industries go up and down completely randomly.

Pair Corralation between Altura Energy and Arete Industries

If you would invest  694.00  in Altura Energy on September 1, 2024 and sell it today you would earn a total of  333.00  from holding Altura Energy or generate 47.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Altura Energy  vs.  Arete Industries

Altura Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 19 (%) 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.

Arete Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arete Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Arete Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Altura Energy and Arete Industries

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

The idea behind Altura Energy and Arete 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.