Correlation Between Alto Metals and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Alto Metals and Catalyst Metals 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 Alto Metals and Catalyst Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alto Metals and Catalyst Metals, you can compare the effects of market volatilities on Alto Metals and Catalyst Metals 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 Alto Metals with a short position of Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alto Metals and Catalyst Metals.
Diversification Opportunities for Alto Metals and Catalyst Metals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alto and Catalyst is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alto Metals and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals and Alto Metals 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 Alto Metals are associated (or correlated) with Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Alto Metals i.e., Alto Metals and Catalyst Metals go up and down completely randomly.
Pair Corralation between Alto Metals and Catalyst Metals
Assuming the 90 days trading horizon Alto Metals is expected to generate 1.78 times less return on investment than Catalyst Metals. In addition to that, Alto Metals is 1.19 times more volatile than Catalyst Metals. It trades about 0.03 of its total potential returns per unit of risk. Catalyst Metals is currently generating about 0.06 per unit of volatility. If you would invest 125.00 in Catalyst Metals on August 27, 2024 and sell it today you would earn a total of 199.00 from holding Catalyst Metals or generate 159.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alto Metals vs. Catalyst Metals
Performance |
| Timeline |
| Alto Metals |
| Catalyst Metals |
Alto Metals and Catalyst Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alto Metals and Catalyst Metals
The main advantage of trading using opposite Alto Metals and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alto Metals position performs unexpectedly, Catalyst Metals 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.| Alto Metals vs. Northern Star Resources | Alto Metals vs. Evolution Mining | Alto Metals vs. Bluescope Steel | Alto Metals vs. Sandfire Resources NL |
| Catalyst Metals vs. TPG Telecom | Catalyst Metals vs. Queste Communications | Catalyst Metals vs. Treasury Wine Estates | Catalyst Metals vs. Stelar Metals |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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