Correlation Between Air Canada and Altai Resources
Can any of the company-specific risk be diversified away by investing in both Air Canada and Altai Resources 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 Air Canada and Altai Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Altai Resources, you can compare the effects of market volatilities on Air Canada and Altai Resources 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 Air Canada with a short position of Altai Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Altai Resources.
Diversification Opportunities for Air Canada and Altai Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Altai is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Altai Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altai Resources and Air Canada 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 Air Canada are associated (or correlated) with Altai Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altai Resources has no effect on the direction of Air Canada i.e., Air Canada and Altai Resources go up and down completely randomly.
Pair Corralation between Air Canada and Altai Resources
Assuming the 90 days horizon Air Canada is expected to generate 0.95 times more return on investment than Altai Resources. However, Air Canada is 1.06 times less risky than Altai Resources. It trades about 0.34 of its potential returns per unit of risk. Altai Resources is currently generating about 0.21 per unit of risk. If you would invest 1,925 in Air Canada on August 29, 2024 and sell it today you would earn a total of 543.00 from holding Air Canada or generate 28.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Canada vs. Altai Resources
Performance |
| Timeline |
| Air Canada |
| Altai Resources |
Air Canada and Altai Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Altai Resources
The main advantage of trading using opposite Air Canada and Altai Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Altai Resources 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 Altai Resources will offset losses from the drop in Altai Resources' long position.The idea behind Air Canada and Altai Resources 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.| Altai Resources vs. Financial 15 Split | Altai Resources vs. Royal Bank of | Altai Resources vs. Intact Financial Corp | Altai Resources vs. US Financial 15 |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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