Correlation Between Altura Mining and Syrah Resources

Can any of the company-specific risk be diversified away by investing in both Altura Mining and Syrah Resources 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 Syrah Resources 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 Syrah Resources Limited, you can compare the effects of market volatilities on Altura Mining and Syrah Resources 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 Syrah Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altura Mining and Syrah Resources.

Diversification Opportunities for Altura Mining and Syrah Resources

0.34

Correlation Coefficient

Altura Mining  Syrah Resources

Weak diversification

The 3 months correlation between Altura and Syrah is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Altura Mining Limited and Syrah Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syrah Resources 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 Syrah Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syrah Resources has no effect on the direction of Altura Mining i.e., Altura Mining and Syrah Resources go up and down completely randomly.

Pair Corralation between Altura Mining and Syrah Resources

Assuming the 90 days horizon Altura Mining Limited is expected to generate 10.98 times more return on investment than Syrah Resources. However, Altura Mining is 10.98 times more volatile than Syrah Resources Limited. It trades about 0.1 of its potential returns per unit of risk. Syrah Resources Limited is currently generating about -0.04 per unit of risk. If you would invest  1.00  in Altura Mining Limited on September 3, 2024 and sell it today you would lose (0.47) from holding Altura Mining Limited or give up 47.0% of portfolio value over 90 days.

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

Altura Mining Limited  vs.  Syrah Resources Limited

Altura Mining Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Mining Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Altura Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Syrah Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Syrah Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Syrah Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altura Mining and Syrah Resources

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

The idea behind Altura Mining Limited and Syrah Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.