Correlation Between Step One and Alto Metals
Can any of the company-specific risk be diversified away by investing in both Step One and Alto 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 Step One and Alto Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Step One Clothing and Alto Metals, you can compare the effects of market volatilities on Step One and Alto 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 Step One with a short position of Alto Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Step One and Alto Metals.
Diversification Opportunities for Step One and Alto Metals
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Step and Alto is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Step One Clothing and Alto Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alto Metals and Step One 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 Step One Clothing are associated (or correlated) with Alto Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alto Metals has no effect on the direction of Step One i.e., Step One and Alto Metals go up and down completely randomly.
Pair Corralation between Step One and Alto Metals
Assuming the 90 days trading horizon Step One Clothing is expected to generate 0.75 times more return on investment than Alto Metals. However, Step One Clothing is 1.33 times less risky than Alto Metals. It trades about 0.12 of its potential returns per unit of risk. Alto Metals is currently generating about 0.04 per unit of risk. If you would invest 27.00 in Step One Clothing on September 1, 2024 and sell it today you would earn a total of 113.00 from holding Step One Clothing or generate 418.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Step One Clothing vs. Alto Metals
Performance |
| Timeline |
| Step One Clothing |
| Alto Metals |
Step One and Alto Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Step One and Alto Metals
The main advantage of trading using opposite Step One and Alto Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Step One position performs unexpectedly, Alto 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 Alto Metals will offset losses from the drop in Alto Metals' long position.| Step One vs. WiseTech Global Limited | Step One vs. Red Hill Iron | Step One vs. Champion Iron | Step One vs. Hutchison Telecommunications |
| Alto Metals vs. Hotel Property Investments | Alto Metals vs. Alternative Investment Trust | Alto Metals vs. Argo Investments | Alto Metals vs. Macquarie Technology Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |