Correlation Between Altius Renewable and Astra Energy

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

By analyzing existing cross correlation between Altius Renewable Royalties and Astra Energy, you can compare the effects of market volatilities on Altius Renewable and Astra Energy 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 Altius Renewable with a short position of Astra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altius Renewable and Astra Energy.

Diversification Opportunities for Altius Renewable and Astra Energy

-0.14

Correlation Coefficient

Altius Renewable  Astra Energy

Good diversification

The 3 months correlation between Altius and Astra is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Altius Renewable Royalties and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and Altius Renewable 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 Altius Renewable Royalties are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Altius Renewable i.e., Altius Renewable and Astra Energy go up and down completely randomly.

Pair Corralation between Altius Renewable and Astra Energy

Assuming the 90 days horizon Altius Renewable is expected to generate 6.9 times less return on investment than Astra Energy. But when comparing it to its historical volatility, Altius Renewable Royalties is 6.72 times less risky than Astra Energy. It trades about 0.04 of its potential returns per unit of risk. Astra Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Astra Energy on September 2, 2024 and sell it today you would lose (14.00) from holding Astra Energy or give up 56.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Altius Renewable Royalties  vs.  Astra Energy

Altius Renewable Roy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altius Renewable Royalties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Altius Renewable reported solid returns over the last few months and may actually be approaching a breakup point.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astra Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Altius Renewable and Astra Energy

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

The idea behind Altius Renewable Royalties and Astra Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.