Correlation Between Berkshire Hathaway and Altus Group

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

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

Diversification Opportunities for Berkshire Hathaway and Altus Group

0.75

Correlation Coefficient

Berkshire Hathaway  Altus Group

Poor diversification

The 3 months correlation between Berkshire and Altus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Altus Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altus Group Limited and Berkshire Hathaway 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 Berkshire Hathaway CDR are associated (or correlated) with Altus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altus Group Limited has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Altus Group go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Altus Group

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 6.67 times less return on investment than Altus Group. But when comparing it to its historical volatility, Berkshire Hathaway CDR is 1.15 times less risky than Altus Group. It trades about 0.02 of its potential returns per unit of risk. Altus Group Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,430  in Altus Group Limited on September 3, 2024 and sell it today you would earn a total of  522.00  from holding Altus Group Limited or generate 9.61% return on investment over 90 days.

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

Berkshire Hathaway CDR  vs.  Altus Group Limited

Berkshire Hathaway CDR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Altus Group Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altus Group Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Altus Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Berkshire Hathaway and Altus Group

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

The idea behind Berkshire Hathaway CDR and Altus Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..