Correlation Between Alumina Limited and ACMAT Corp

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

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

Diversification Opportunities for Alumina Limited and ACMAT Corp

0.0

Correlation Coefficient

Alumina Limited  ACMAT Corp

Pay attention - limited upside

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

Pair Corralation between Alumina Limited and ACMAT Corp

If you would invest  369.00  in Alumina Limited PK on February 1, 2024 and sell it today you would earn a total of  33.00  from holding Alumina Limited PK or generate 8.94% return on investment over 90 days.

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

Alumina Limited PK  vs.  ACMAT Corp

Alumina Limited PK

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alumina Limited PK are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Alumina Limited showed solid returns over the last few months and may actually be approaching a breakup point.

ACMAT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACMAT Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ACMAT Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alumina Limited and ACMAT Corp

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

The idea behind Alumina Limited PK and ACMAT 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.