Correlation Between Semirara Mining and Alliance Global

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

By analyzing existing cross correlation between Semirara Mining Corp and Alliance Global Group, you can compare the effects of market volatilities on Semirara Mining and Alliance Global 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 Semirara Mining with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semirara Mining and Alliance Global.

Diversification Opportunities for Semirara Mining and Alliance Global

-0.44

Correlation Coefficient

Semirara Mining  Alliance Global

Very good diversification

The 3 months correlation between Semirara and Alliance is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Semirara Mining Corp and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and Semirara Mining 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 Semirara Mining Corp are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of Semirara Mining i.e., Semirara Mining and Alliance Global go up and down completely randomly.

Pair Corralation between Semirara Mining and Alliance Global

Assuming the 90 days trading horizon Semirara Mining Corp is expected to generate 0.67 times more return on investment than Alliance Global. However, Semirara Mining Corp is 1.48 times less risky than Alliance Global. It trades about 0.09 of its potential returns per unit of risk. Alliance Global Group is currently generating about -0.15 per unit of risk. If you would invest  3,425  in Semirara Mining Corp on October 9, 2024 and sell it today you would earn a total of  65.00  from holding Semirara Mining Corp or generate 1.9% return on investment over 90 days.

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

Semirara Mining Corp  vs.  Alliance Global Group

Semirara Mining Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semirara Mining Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Semirara Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alliance Global Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Alliance Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Semirara Mining and Alliance Global

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

The idea behind Semirara Mining Corp and Alliance Global Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.