Correlation Between Global Battery and Altura Mining

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

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

Diversification Opportunities for Global Battery and Altura Mining

0.18

Correlation Coefficient

Global Battery  Altura Mining

Average diversification

The 3 months correlation between Global and Altura is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Global Battery Metals and Altura Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Mining Limited and Global Battery 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 Global Battery Metals are associated (or correlated) with Altura Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Mining Limited has no effect on the direction of Global Battery i.e., Global Battery and Altura Mining go up and down completely randomly.

Pair Corralation between Global Battery and Altura Mining

Assuming the 90 days horizon Global Battery is expected to generate 20.8 times less return on investment than Altura Mining. But when comparing it to its historical volatility, Global Battery Metals is 11.1 times less risky than Altura Mining. It trades about 0.07 of its potential returns per unit of risk. Altura Mining Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.21  in Altura Mining Limited on September 27, 2024 and sell it today you would lose (1.65) from holding Altura Mining Limited or give up 74.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Global Battery Metals  vs.  Altura Mining Limited

Global Battery Metals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Battery Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Global Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Altura Mining Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altura Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Battery and Altura Mining

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

The idea behind Global Battery Metals and Altura Mining Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.