Correlation Between Vulcan Energy and Altair International

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

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

Diversification Opportunities for Vulcan Energy and Altair International

-0.48

Correlation Coefficient

Vulcan Energy  Altair International

Very good diversification

The 3 months correlation between Vulcan and Altair is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources 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 Vulcan Energy 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 Vulcan Energy Resources 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 Vulcan Energy i.e., Vulcan Energy and Altair International go up and down completely randomly.

Pair Corralation between Vulcan Energy and Altair International

Assuming the 90 days horizon Vulcan Energy Resources is expected to under-perform the Altair International. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vulcan Energy Resources is 2.4 times less risky than Altair International. The pink sheet trades about -0.45 of its potential returns per unit of risk. The Altair International Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4.30  in Altair International Corp on September 27, 2024 and sell it today you would lose (1.44) from holding Altair International Corp or give up 33.49% of portfolio value over 90 days.

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

Vulcan Energy Resources  vs.  Altair International Corp

Vulcan Energy Resources

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Energy Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vulcan Energy 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 fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vulcan Energy and Altair International

The main advantage of trading using opposite Vulcan Energy and Altair International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Energy 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 Vulcan Energy Resources 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.