Correlation Between Alumina Limited and PMI

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

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

Diversification Opportunities for Alumina Limited and PMI

0.62

Correlation Coefficient

Alumina Limited  PMI

Poor diversification

The 3 months correlation between Alumina and PMI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited PK and The PMI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMI Group and Alumina Limited 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 Alumina Limited PK are associated (or correlated) with PMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMI Group has no effect on the direction of Alumina Limited i.e., Alumina Limited and PMI go up and down completely randomly.

Pair Corralation between Alumina Limited and PMI

If you would invest  369.00  in Alumina Limited PK on September 28, 2024 and sell it today you would earn a total of  0.00  from holding Alumina Limited PK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Alumina Limited PK  vs.  The PMI Group

Alumina Limited PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumina Limited PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Alumina Limited is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PMI Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The PMI Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Alumina Limited and PMI

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

The idea behind Alumina Limited PK and The PMI Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.