Correlation Between Excellon Resources and Altus Group

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

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

Diversification Opportunities for Excellon Resources and Altus Group

-0.27

Correlation Coefficient

Excellon Resources  Altus Group

Very good diversification

The 3 months correlation between Excellon and Altus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Excellon Resources 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 Excellon 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 Excellon Resources 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 Excellon Resources i.e., Excellon Resources and Altus Group go up and down completely randomly.

Pair Corralation between Excellon Resources and Altus Group

Assuming the 90 days trading horizon Excellon Resources is expected to generate 5.81 times more return on investment than Altus Group. However, Excellon Resources is 5.81 times more volatile than Altus Group Limited. It trades about 0.02 of its potential returns per unit of risk. Altus Group Limited is currently generating about 0.12 per unit of risk. If you would invest  10.00  in Excellon Resources on September 4, 2024 and sell it today you would lose (0.50) from holding Excellon Resources or give up 5.0% of portfolio value over 90 days.

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

Excellon Resources  vs.  Altus Group Limited

Excellon Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Excellon Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excellon Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Excellon Resources and Altus Group

The main advantage of trading using opposite Excellon Resources and Altus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellon Resources 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 Excellon Resources 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.