Correlation Between Altus Power and Highland Longshort

Can any of the company-specific risk be diversified away by investing in both Altus Power and Highland Longshort 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 Altus Power and Highland Longshort into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altus Power and Highland Longshort Healthcare, you can compare the effects of market volatilities on Altus Power and Highland Longshort 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 Altus Power with a short position of Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Highland Longshort.

Diversification Opportunities for Altus Power and Highland Longshort

-0.59

Correlation Coefficient

Altus Power  Highland Longshort

Excellent diversification

The 3 months correlation between Altus and Highland is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort and Altus Power 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 Altus Power are associated (or correlated) with Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of Altus Power i.e., Altus Power and Highland Longshort go up and down completely randomly.

Pair Corralation between Altus Power and Highland Longshort

Given the investment horizon of 90 days Altus Power is expected to generate 19.87 times more return on investment than Highland Longshort. However, Altus Power is 19.87 times more volatile than Highland Longshort Healthcare. It trades about 0.01 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.09 per unit of risk. If you would invest  582.00  in Altus Power on January 25, 2024 and sell it today you would lose (200.00) from holding Altus Power or give up 34.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Altus Power  vs.  Highland Longshort Healthcare

Altus Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altus Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Highland Longshort

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Highland Longshort Healthcare are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Highland Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Altus Power and Highland Longshort

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

The idea behind Altus Power and Highland Longshort Healthcare 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.