Correlation Between Royal Bank and Altair Resources

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

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

Diversification Opportunities for Royal Bank and Altair Resources

0.0

Correlation Coefficient

Royal Bank  Altair Resources

Pay attention - limited upside

The 3 months correlation between Royal and Altair is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Altair Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altair Resources and Royal Bank 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 Royal Bank of are associated (or correlated) with Altair Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altair Resources has no effect on the direction of Royal Bank i.e., Royal Bank and Altair Resources go up and down completely randomly.

Pair Corralation between Royal Bank and Altair Resources

Assuming the 90 days trading horizon Royal Bank is expected to generate 1.78 times less return on investment than Altair Resources. But when comparing it to its historical volatility, Royal Bank of is 9.0 times less risky than Altair Resources. It trades about 0.14 of its potential returns per unit of risk. Altair Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Altair Resources on October 2, 2024 and sell it today you would earn a total of  0.00  from holding Altair Resources or generate 0.0% return on investment over 90 days.

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

Royal Bank of  vs.  Altair Resources

Royal Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Royal Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Altair Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altair Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Altair Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Royal Bank and Altair Resources

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

The idea behind Royal Bank of and Altair Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.