Correlation Between Huntsman Exploration and Altair International

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

By analyzing existing cross correlation between Huntsman Exploration and Altair International Corp, you can compare the effects of market volatilities on Huntsman Exploration and Altair 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 Huntsman Exploration with a short position of Altair International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huntsman Exploration and Altair International.

Diversification Opportunities for Huntsman Exploration and Altair International

0.3

Correlation Coefficient

Huntsman Exploration  Altair International

Weak diversification

The 3 months correlation between Huntsman and Altair is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Huntsman Exploration and Altair International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair International Corp and Huntsman Exploration 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 Huntsman Exploration are associated (or correlated) with Altair International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair International Corp has no effect on the direction of Huntsman Exploration i.e., Huntsman Exploration and Altair International go up and down completely randomly.

Pair Corralation between Huntsman Exploration and Altair International

Assuming the 90 days horizon Huntsman Exploration is expected to generate 5.6 times more return on investment than Altair International. However, Huntsman Exploration is 5.6 times more volatile than Altair International Corp. It trades about 0.11 of its potential returns per unit of risk. Altair International Corp is currently generating about 0.01 per unit of risk. If you would invest  1.30  in Huntsman Exploration on September 13, 2024 and sell it today you would earn a total of  1.10  from holding Huntsman Exploration or generate 84.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Huntsman Exploration  vs.  Altair International Corp

Huntsman Exploration

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huntsman Exploration are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Huntsman Exploration reported solid returns over the last few months and may actually be approaching a breakup point.

Altair International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Altair International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Huntsman Exploration and Altair International

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

The idea behind Huntsman Exploration and Altair International Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.