Correlation Between Alumina and Public Company

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

By analyzing existing cross correlation between Alumina Limited and Public Company Management, you can compare the effects of market volatilities on Alumina and Public Company 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 Alumina with a short position of Public Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina and Public Company.

Diversification Opportunities for Alumina and Public Company

0.69

Correlation Coefficient

Alumina  Public Company

Poor diversification

The 3 months correlation between Alumina and Public is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited and Public Company Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Management and Alumina 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 Alumina Limited are associated (or correlated) with Public Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Management has no effect on the direction of Alumina i.e., Alumina and Public Company go up and down completely randomly.

Pair Corralation between Alumina and Public Company

If you would invest  20.00  in Public Company Management on September 24, 2024 and sell it today you would earn a total of  19.00  from holding Public Company Management or generate 95.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Alumina Limited  vs.  Public Company Management

Alumina Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Public Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Company Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Public Company exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alumina and Public Company

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

The idea behind Alumina Limited and Public Company Management 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.