Correlation Between Altura Mining and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Altura Mining and Leading Edge 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 Altura Mining and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altura Mining Limited and Leading Edge Materials, you can compare the effects of market volatilities on Altura Mining and Leading Edge 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 Altura Mining with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altura Mining and Leading Edge.
Diversification Opportunities for Altura Mining and Leading Edge
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Altura and Leading is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Altura Mining 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 Altura Mining Limited are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Altura Mining i.e., Altura Mining and Leading Edge go up and down completely randomly.
Pair Corralation between Altura Mining and Leading Edge
Assuming the 90 days horizon Altura Mining Limited is expected to generate 40.52 times more return on investment than Leading Edge. However, Altura Mining is 40.52 times more volatile than Leading Edge Materials. It trades about 0.16 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.04 per unit of risk. If you would invest 1.00 in Altura Mining Limited on August 29, 2024 and sell it today you would lose (0.48) from holding Altura Mining Limited or give up 48.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altura Mining Limited vs. Leading Edge Materials
Performance |
| Timeline |
| Altura Mining Limited |
| Leading Edge Materials |
Altura Mining and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altura Mining and Leading Edge
The main advantage of trading using opposite Altura Mining and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altura Mining position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Altura Mining vs. Aurelia Metals Limited | Altura Mining vs. Ascendant Resources | Altura Mining vs. Artemis Resources | Altura Mining vs. Azimut Exploration |
| Leading Edge vs. Grid Metals Corp | Leading Edge vs. Fireweed Zinc | Leading Edge vs. First American Silver | Leading Edge vs. Australian Strategic Materials |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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