Correlation Between Berkshire Hathaway and Altex Industries

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Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Altex 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 Berkshire Hathaway and Altex Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Altex Industries, you can compare the effects of market volatilities on Berkshire Hathaway and Altex 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 Berkshire Hathaway with a short position of Altex Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Altex Industries.

Diversification Opportunities for Berkshire Hathaway and Altex Industries

BerkshireAltexDiversified AwayBerkshireAltexDiversified Away100%
0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Berkshire and Altex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Altex Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altex Industries and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Altex Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altex Industries has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Altex Industries go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Altex Industries

Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Altex Industries. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 9.49 times less risky than Altex Industries. The stock trades about -0.25 of its potential returns per unit of risk. The Altex Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Altex Industries on September 18, 2024 and sell it today you would earn a total of  6.00  from holding Altex Industries or generate 25.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Berkshire Hathaway  vs.  Altex Industries

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -25-20-15-10-505
JavaScript chart by amCharts 3.21.15BRK-A ALTX
       Timeline  
Berkshire Hathaway 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Berkshire Hathaway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec660,000670,000680,000690,000700,000710,000720,000730,000
Altex Industries 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Altex Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Altex Industries showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.20.220.240.260.280.3

Berkshire Hathaway and Altex Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.34-2.5-1.66-0.830.01420.851.72.553.41 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15BRK-A ALTX
       Returns  

Pair Trading with Berkshire Hathaway and Altex Industries

The main advantage of trading using opposite Berkshire Hathaway and Altex Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Altex 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 Altex Industries will offset losses from the drop in Altex Industries' long position.
The idea behind Berkshire Hathaway and Altex 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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