Correlation Between Altair International and Sumitomo Metal
Can any of the company-specific risk be diversified away by investing in both Altair International and Sumitomo Metal 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 Altair International and Sumitomo Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair International Corp and Sumitomo Metal Mining, you can compare the effects of market volatilities on Altair International and Sumitomo Metal 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 Altair International with a short position of Sumitomo Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair International and Sumitomo Metal.
Diversification Opportunities for Altair International and Sumitomo Metal
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Altair and Sumitomo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and Sumitomo Metal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Metal Mining and Altair International 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 Altair International Corp are associated (or correlated) with Sumitomo Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Metal Mining has no effect on the direction of Altair International i.e., Altair International and Sumitomo Metal go up and down completely randomly.
Pair Corralation between Altair International and Sumitomo Metal
Given the investment horizon of 90 days Altair International Corp is expected to generate 14.77 times more return on investment than Sumitomo Metal. However, Altair International is 14.77 times more volatile than Sumitomo Metal Mining. It trades about 0.06 of its potential returns per unit of risk. Sumitomo Metal Mining is currently generating about -0.32 per unit of risk. If you would invest 3.20 in Altair International Corp on October 13, 2024 and sell it today you would lose (0.12) from holding Altair International Corp or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Altair International Corp vs. Sumitomo Metal Mining
Performance |
| Timeline |
| Altair International Corp |
| Sumitomo Metal Mining |
Altair International and Sumitomo Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair International and Sumitomo Metal
The main advantage of trading using opposite Altair International and Sumitomo Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair International position performs unexpectedly, Sumitomo Metal 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 Sumitomo Metal will offset losses from the drop in Sumitomo Metal's long position.| Altair International vs. Atco Mining | Altair International vs. Bitterroot Resources | Altair International vs. Avarone Metals | Altair International vs. Huntsman Exploration |
| Sumitomo Metal vs. Boliden AB ADR | Sumitomo Metal vs. Anglo American PLC | Sumitomo Metal vs. Glencore PLC | Sumitomo Metal vs. Snow Lake Resources |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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