Correlation Between Glencore Plc and Alphamin Resources

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

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

Diversification Opportunities for Glencore Plc and Alphamin Resources

0.86

Correlation Coefficient

Glencore Plc  Alphamin Resources

Very poor diversification

The 3 months correlation between Glencore and Alphamin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Glencore plc and Alphamin Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphamin Resources Corp and Glencore Plc 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 Glencore plc are associated (or correlated) with Alphamin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphamin Resources Corp has no effect on the direction of Glencore Plc i.e., Glencore Plc and Alphamin Resources go up and down completely randomly.

Pair Corralation between Glencore Plc and Alphamin Resources

Assuming the 90 days trading horizon Glencore Plc is expected to generate 1.32 times less return on investment than Alphamin Resources. But when comparing it to its historical volatility, Glencore plc is 1.96 times less risky than Alphamin Resources. It trades about 0.16 of its potential returns per unit of risk. Alphamin Resources Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Alphamin Resources Corp on February 15, 2024 and sell it today you would earn a total of  16.00  from holding Alphamin Resources Corp or generate 25.81% return on investment over 90 days.

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

Glencore plc  vs.  Alphamin Resources Corp

Glencore plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glencore plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Glencore Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Alphamin Resources Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphamin Resources Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alphamin Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glencore Plc and Alphamin Resources

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

The idea behind Glencore plc and Alphamin Resources Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.