Correlation Between Altair Resources and First Majestic

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

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

Diversification Opportunities for Altair Resources and First Majestic

0.0

Correlation Coefficient

Altair Resources  First Majestic

Pay attention - limited upside

The 3 months correlation between Altair and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altair Resources and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Altair Resources 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 Resources are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Altair Resources i.e., Altair Resources and First Majestic go up and down completely randomly.

Pair Corralation between Altair Resources and First Majestic

Assuming the 90 days horizon Altair Resources is expected to generate 2.73 times more return on investment than First Majestic. However, Altair Resources is 2.73 times more volatile than First Majestic Silver. It trades about 0.02 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of risk. If you would invest  3.00  in Altair Resources on October 10, 2024 and sell it today you would lose (2.00) from holding Altair Resources or give up 66.67% of portfolio value over 90 days.

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

Altair Resources  vs.  First Majestic Silver

Altair Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Altair Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Altair Resources and First Majestic

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

The idea behind Altair Resources and First Majestic Silver 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.