Correlation Between Black Rock and Alto Metals

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

By analyzing existing cross correlation between Black Rock Mining and Alto Metals, you can compare the effects of market volatilities on Black Rock and Alto Metals 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 Black Rock with a short position of Alto Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Alto Metals.

Diversification Opportunities for Black Rock and Alto Metals

-0.72

Correlation Coefficient

Black Rock  Alto Metals

Pay attention - limited upside

The 3 months correlation between Black and Alto is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Alto Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alto Metals and Black Rock 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 Black Rock Mining are associated (or correlated) with Alto Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alto Metals has no effect on the direction of Black Rock i.e., Black Rock and Alto Metals go up and down completely randomly.

Pair Corralation between Black Rock and Alto Metals

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Alto Metals. In addition to that, Black Rock is 1.33 times more volatile than Alto Metals. It trades about -0.14 of its total potential returns per unit of risk. Alto Metals is currently generating about 0.23 per unit of volatility. If you would invest  6.20  in Alto Metals on September 12, 2024 and sell it today you would earn a total of  3.20  from holding Alto Metals or generate 51.61% return on investment over 90 days.

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

Black Rock Mining  vs.  Alto Metals

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Alto Metals

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alto Metals are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Alto Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Rock and Alto Metals

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

The idea behind Black Rock Mining and Alto Metals 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.