Correlation Between Northern Sphere and Alumina Limited

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

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

Diversification Opportunities for Northern Sphere and Alumina Limited

0.0

Correlation Coefficient

Northern Sphere  Alumina Limited

Pay attention - limited upside

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

Pair Corralation between Northern Sphere and Alumina Limited

If you would invest  290.00  in Alumina Limited PK on March 4, 2024 and sell it today you would earn a total of  207.00  from holding Alumina Limited PK or generate 71.38% return on investment over 90 days.

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

Northern Sphere Mining  vs.  Alumina Limited PK

Northern Sphere Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Sphere Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Northern Sphere is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alumina Limited PK

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alumina Limited PK are ranked lower than 23 (%) 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.

Pair Trading with Northern Sphere and Alumina Limited

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

The idea behind Northern Sphere Mining and Alumina Limited PK 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.