Correlation Between Alumina Limited and Callaway Golf

Can any of the company-specific risk be diversified away by investing in both Alumina Limited and Callaway Golf 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 Callaway Golf 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 Callaway Golf, you can compare the effects of market volatilities on Alumina Limited and Callaway Golf 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 Callaway Golf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumina Limited and Callaway Golf.

Diversification Opportunities for Alumina Limited and Callaway Golf

-0.82

Correlation Coefficient

Alumina Limited  Callaway Golf

Pay attention - limited upside

The 3 months correlation between Alumina and Callaway is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alumina Limited PK and Callaway Golf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Callaway Golf 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 Callaway Golf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Callaway Golf has no effect on the direction of Alumina Limited i.e., Alumina Limited and Callaway Golf go up and down completely randomly.

Pair Corralation between Alumina Limited and Callaway Golf

If you would invest  314.00  in Alumina Limited PK on March 7, 2024 and sell it today you would earn a total of  166.00  from holding Alumina Limited PK or generate 52.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Alumina Limited PK  vs.  Callaway Golf

Alumina Limited PK

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alumina Limited PK are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Alumina Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Callaway Golf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Callaway Golf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Callaway Golf is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alumina Limited and Callaway Golf

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

The idea behind Alumina Limited PK and Callaway Golf 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.