Correlation Between Financial and Altiplano Metals

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

By analyzing existing cross correlation between Financial 15 Split and Altiplano Metals, you can compare the effects of market volatilities on Financial and Altiplano Metals 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 Financial with a short position of Altiplano Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Altiplano Metals.

Diversification Opportunities for Financial and Altiplano Metals

-0.78

Correlation Coefficient

Financial  Altiplano Metals

Pay attention - limited upside

The 3 months correlation between Financial and Altiplano is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Altiplano Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altiplano Metals and Financial 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 Financial 15 Split are associated (or correlated) with Altiplano Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altiplano Metals has no effect on the direction of Financial i.e., Financial and Altiplano Metals go up and down completely randomly.

Pair Corralation between Financial and Altiplano Metals

Assuming the 90 days trading horizon Financial 15 Split is expected to generate 0.04 times more return on investment than Altiplano Metals. However, Financial 15 Split is 23.63 times less risky than Altiplano Metals. It trades about 0.18 of its potential returns per unit of risk. Altiplano Metals is currently generating about 0.0 per unit of risk. If you would invest  828.00  in Financial 15 Split on October 20, 2024 and sell it today you would earn a total of  254.00  from holding Financial 15 Split or generate 30.68% return on investment over 90 days.

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

Financial 15 Split  vs.  Altiplano Metals

Financial 15 Split

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altiplano Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altiplano Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Financial and Altiplano Metals

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

The idea behind Financial 15 Split and Altiplano Metals 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.