Correlation Between Altura Mining and IGO

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

By analyzing existing cross correlation between Altura Mining Limited and IGO Limited, you can compare the effects of market volatilities on Altura Mining and IGO 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 Altura Mining with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altura Mining and IGO.

Diversification Opportunities for Altura Mining and IGO

0.16

Correlation Coefficient

Altura Mining  IGO

Average diversification

The 3 months correlation between Altura and IGO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and Altura Mining 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 Altura Mining Limited are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of Altura Mining i.e., Altura Mining and IGO go up and down completely randomly.

Pair Corralation between Altura Mining and IGO

Assuming the 90 days horizon Altura Mining Limited is expected to generate 18.3 times more return on investment than IGO. However, Altura Mining is 18.3 times more volatile than IGO Limited. It trades about 0.21 of its potential returns per unit of risk. IGO Limited is currently generating about -0.08 per unit of risk. If you would invest  0.52  in Altura Mining Limited on October 20, 2024 and sell it today you would earn a total of  0.68  from holding Altura Mining Limited or generate 130.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Altura Mining Limited  vs.  IGO Limited

Altura Mining Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Altura Mining reported solid returns over the last few months and may actually be approaching a breakup point.

IGO Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IGO Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Altura Mining and IGO

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

The idea behind Altura Mining Limited and IGO Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.