Correlation Between Altair International and Lake Resources

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

By analyzing existing cross correlation between Altair International Corp and Lake Resources NL, you can compare the effects of market volatilities on Altair International and Lake 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 Altair International with a short position of Lake Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair International and Lake Resources.

Diversification Opportunities for Altair International and Lake Resources

0.27

Correlation Coefficient

Altair International  Lake Resources

Modest diversification

The 3 months correlation between Altair and Lake is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and Lake Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Resources NL and Altair International 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 Altair International Corp are associated (or correlated) with Lake Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Resources NL has no effect on the direction of Altair International i.e., Altair International and Lake Resources go up and down completely randomly.

Pair Corralation between Altair International and Lake Resources

Given the investment horizon of 90 days Altair International Corp is expected to generate 2.13 times more return on investment than Lake Resources. However, Altair International is 2.13 times more volatile than Lake Resources NL. It trades about 0.06 of its potential returns per unit of risk. Lake Resources NL is currently generating about -0.03 per unit of risk. If you would invest  29.00  in Altair International Corp on September 22, 2024 and sell it today you would lose (24.90) from holding Altair International Corp or give up 85.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Altair International Corp  vs.  Lake Resources NL

Altair International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Altair International is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Lake Resources NL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lake Resources NL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting forward-looking signals, Lake Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altair International and Lake Resources

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

The idea behind Altair International Corp and Lake Resources NL 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.