Correlation Between APPLIED MATERIALS and ALTAIR RES
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and ALTAIR RES 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 APPLIED MATERIALS and ALTAIR RES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and ALTAIR RES INC, you can compare the effects of market volatilities on APPLIED MATERIALS and ALTAIR RES 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 APPLIED MATERIALS with a short position of ALTAIR RES. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and ALTAIR RES.
Diversification Opportunities for APPLIED MATERIALS and ALTAIR RES
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between APPLIED and ALTAIR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and ALTAIR RES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTAIR RES INC and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with ALTAIR RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTAIR RES INC has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and ALTAIR RES go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and ALTAIR RES
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 25.65 times less return on investment than ALTAIR RES. But when comparing it to its historical volatility, APPLIED MATERIALS is 21.67 times less risky than ALTAIR RES. It trades about 0.04 of its potential returns per unit of risk. ALTAIR RES INC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.40 in ALTAIR RES INC on September 1, 2024 and sell it today you would lose (0.35) from holding ALTAIR RES INC or give up 87.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
APPLIED MATERIALS vs. ALTAIR RES INC
Performance |
| Timeline |
| APPLIED MATERIALS |
| ALTAIR RES INC |
APPLIED MATERIALS and ALTAIR RES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and ALTAIR RES
The main advantage of trading using opposite APPLIED MATERIALS and ALTAIR RES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, ALTAIR RES 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 RES will offset losses from the drop in ALTAIR RES's long position.| APPLIED MATERIALS vs. QBE Insurance Group | APPLIED MATERIALS vs. Selective Insurance Group | APPLIED MATERIALS vs. Singapore Reinsurance | APPLIED MATERIALS vs. United Natural Foods |
| ALTAIR RES vs. Rio Tinto Group | ALTAIR RES vs. Liontown Resources Limited | ALTAIR RES vs. American Lithium Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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