Correlation Between Altamira Gold and Western Investment

Can any of the company-specific risk be diversified away by investing in both Altamira Gold and Western Investment 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 Altamira Gold and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altamira Gold Corp and Western Investment, you can compare the effects of market volatilities on Altamira Gold and Western Investment 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 Altamira Gold with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altamira Gold and Western Investment.

Diversification Opportunities for Altamira Gold and Western Investment

-0.47

Correlation Coefficient

Altamira Gold  Western Investment

Very good diversification

The 3 months correlation between Altamira and Western is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Altamira Gold Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Altamira Gold 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 Altamira Gold Corp are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Altamira Gold i.e., Altamira Gold and Western Investment go up and down completely randomly.

Pair Corralation between Altamira Gold and Western Investment

Assuming the 90 days trading horizon Altamira Gold Corp is expected to under-perform the Western Investment. In addition to that, Altamira Gold is 2.06 times more volatile than Western Investment. It trades about -0.04 of its total potential returns per unit of risk. Western Investment is currently generating about 0.19 per unit of volatility. If you would invest  41.00  in Western Investment on October 22, 2024 and sell it today you would earn a total of  18.00  from holding Western Investment or generate 43.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Altamira Gold Corp  vs.  Western Investment

Altamira Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altamira Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Western Investment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altamira Gold and Western Investment

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

The idea behind Altamira Gold Corp and Western Investment 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.