Correlation Between Altamira Gold and Red Pine

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

By analyzing existing cross correlation between Altamira Gold Corp and Red Pine Exploration, you can compare the effects of market volatilities on Altamira Gold and Red Pine 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 Altamira Gold with a short position of Red Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altamira Gold and Red Pine.

Diversification Opportunities for Altamira Gold and Red Pine

-0.25

Correlation Coefficient

Altamira Gold  Red Pine

Very good diversification

The 3 months correlation between Altamira and Red is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Altamira Gold Corp and Red Pine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Pine Exploration and Altamira Gold 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 Altamira Gold Corp are associated (or correlated) with Red Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Pine Exploration has no effect on the direction of Altamira Gold i.e., Altamira Gold and Red Pine go up and down completely randomly.

Pair Corralation between Altamira Gold and Red Pine

Assuming the 90 days horizon Altamira Gold Corp is expected to under-perform the Red Pine. In addition to that, Altamira Gold is 1.26 times more volatile than Red Pine Exploration. It trades about -0.05 of its total potential returns per unit of risk. Red Pine Exploration is currently generating about 0.01 per unit of volatility. If you would invest  8.91  in Red Pine Exploration on November 29, 2024 and sell it today you would lose (0.12) from holding Red Pine Exploration or give up 1.35% of portfolio value over 90 days.

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

Altamira Gold Corp  vs.  Red Pine Exploration

Altamira Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altamira Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Red Pine Exploration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Red Pine Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Red Pine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Altamira Gold and Red Pine

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

The idea behind Altamira Gold Corp and Red Pine Exploration 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.