Correlation Between Estre Ambiental and Alpha Metallurgical

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

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

Diversification Opportunities for Estre Ambiental and Alpha Metallurgical

0.0

Correlation Coefficient

Estre Ambiental  Alpha Metallurgical

Pay attention - limited upside

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

Pair Corralation between Estre Ambiental and Alpha Metallurgical

If you would invest  14,185  in Alpha Metallurgical Resources on February 28, 2024 and sell it today you would earn a total of  16,533  from holding Alpha Metallurgical Resources or generate 116.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Estre Ambiental  vs.  Alpha Metallurgical Resources

Estre Ambiental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Estre Ambiental has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Estre Ambiental is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Alpha Metallurgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Metallurgical Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Estre Ambiental and Alpha Metallurgical

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

The idea behind Estre Ambiental and Alpha Metallurgical 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.