Correlation Between Lynas Rare and Altura Mining
Can any of the company-specific risk be diversified away by investing in both Lynas Rare and Altura Mining 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 Lynas Rare and Altura Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lynas Rare Earths and Altura Mining Limited, you can compare the effects of market volatilities on Lynas Rare and Altura Mining 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 Lynas Rare with a short position of Altura Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lynas Rare and Altura Mining.
Diversification Opportunities for Lynas Rare and Altura Mining
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lynas and Altura is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Altura Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Mining Limited and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Altura Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Mining Limited has no effect on the direction of Lynas Rare i.e., Lynas Rare and Altura Mining go up and down completely randomly.
Pair Corralation between Lynas Rare and Altura Mining
Assuming the 90 days horizon Lynas Rare is expected to generate 484.32 times less return on investment than Altura Mining. But when comparing it to its historical volatility, Lynas Rare Earths is 52.67 times less risky than Altura Mining. It trades about 0.01 of its potential returns per unit of risk. Altura Mining Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Altura Mining Limited on September 3, 2024 and sell it today you would earn a total of 0.33 from holding Altura Mining Limited or generate 165.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lynas Rare Earths vs. Altura Mining Limited
Performance |
| Timeline |
| Lynas Rare Earths |
| Altura Mining Limited |
Lynas Rare and Altura Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lynas Rare and Altura Mining
The main advantage of trading using opposite Lynas Rare and Altura Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lynas Rare position performs unexpectedly, Altura Mining 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 Altura Mining will offset losses from the drop in Altura Mining's long position.| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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