Correlation Between Altagas Cum and Therma Bright

Can any of the company-specific risk be diversified away by investing in both Altagas Cum and Therma Bright 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 Altagas Cum and Therma Bright into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altagas Cum Red and Therma Bright, you can compare the effects of market volatilities on Altagas Cum and Therma Bright 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 Altagas Cum with a short position of Therma Bright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altagas Cum and Therma Bright.

Diversification Opportunities for Altagas Cum and Therma Bright

-0.45

Correlation Coefficient

Altagas Cum  Therma Bright

Very good diversification

The 3 months correlation between Altagas and Therma is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Altagas Cum Red and Therma Bright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therma Bright and Altagas Cum 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 Altagas Cum Red are associated (or correlated) with Therma Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therma Bright has no effect on the direction of Altagas Cum i.e., Altagas Cum and Therma Bright go up and down completely randomly.

Pair Corralation between Altagas Cum and Therma Bright

Assuming the 90 days trading horizon Altagas Cum is expected to generate 14.76 times less return on investment than Therma Bright. But when comparing it to its historical volatility, Altagas Cum Red is 20.63 times less risky than Therma Bright. It trades about 0.12 of its potential returns per unit of risk. Therma Bright is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Therma Bright on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Therma Bright or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Altagas Cum Red  vs.  Therma Bright

Altagas Cum Red

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altagas Cum Red are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Altagas Cum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Therma Bright

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Therma Bright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Altagas Cum and Therma Bright

The main advantage of trading using opposite Altagas Cum and Therma Bright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altagas Cum position performs unexpectedly, Therma Bright 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 Therma Bright will offset losses from the drop in Therma Bright's long position.

The idea behind Altagas Cum Red and Therma Bright pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.