Correlation Between Altura Energy and ROK Resources

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

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

Diversification Opportunities for Altura Energy and ROK Resources

-0.77

Correlation Coefficient

Altura Energy  ROK Resources

Pay attention - limited upside

The 3 months correlation between Altura and ROK is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and ROK Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROK Resources 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 ROK Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROK Resources has no effect on the direction of Altura Energy i.e., Altura Energy and ROK Resources go up and down completely randomly.

Pair Corralation between Altura Energy and ROK Resources

Assuming the 90 days horizon Altura Energy is expected to generate 1.11 times more return on investment than ROK Resources. However, Altura Energy is 1.11 times more volatile than ROK Resources. It trades about 0.35 of its potential returns per unit of risk. ROK Resources is currently generating about 0.03 per unit of risk. 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	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Altura Energy  vs.  ROK Resources

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.

ROK Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ROK Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Altura Energy and ROK Resources

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

The idea behind Altura Energy and ROK Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.