Correlation Between Aloro Mining and Western Investment

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Can any of the company-specific risk be diversified away by investing in both Aloro Mining and Western Investment 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 Aloro Mining and Western Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aloro Mining Corp and Western Investment, you can compare the effects of market volatilities on Aloro Mining and Western Investment 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 Aloro Mining with a short position of Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aloro Mining and Western Investment.

Diversification Opportunities for Aloro Mining and Western Investment

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Aloro and Western is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aloro Mining Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment and Aloro 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 Aloro Mining Corp are associated (or correlated) with Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Aloro Mining i.e., Aloro Mining and Western Investment go up and down completely randomly.

Pair Corralation between Aloro Mining and Western Investment

Assuming the 90 days trading horizon Aloro Mining Corp is expected to generate 5.38 times more return on investment than Western Investment. However, Aloro Mining is 5.38 times more volatile than Western Investment. It trades about 0.08 of its potential returns per unit of risk. Western Investment is currently generating about 0.02 per unit of risk. If you would invest  1.00  in Aloro Mining Corp on August 16, 2024 and sell it today you would earn a total of  0.00  from holding Aloro Mining Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

Aloro Mining Corp  vs.  Western Investment

 Performance 
       Timeline  
Aloro Mining Corp 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Aloro Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
Western Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Western Investment is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aloro Mining and Western Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aloro Mining and Western Investment

The main advantage of trading using opposite Aloro Mining and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aloro Mining position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.
The idea behind Aloro Mining Corp and Western Investment 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.
Check out your portfolio center.
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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