Correlation Between Alstria Office and Summit Materials

Can any of the company-specific risk be diversified away by investing in both Alstria Office and Summit Materials 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 Alstria Office and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between alstria office REIT AG and Summit Materials Cl, you can compare the effects of market volatilities on Alstria Office and Summit Materials 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 Alstria Office with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and Summit Materials.

Diversification Opportunities for Alstria Office and Summit Materials

0.9

Correlation Coefficient

Alstria Office  Summit Materials

Almost no diversification

The 3 months correlation between Alstria and Summit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Alstria Office 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 alstria office REIT AG are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Alstria Office i.e., Alstria Office and Summit Materials go up and down completely randomly.

Pair Corralation between Alstria Office and Summit Materials

Assuming the 90 days trading horizon Alstria Office is expected to generate 1.17 times less return on investment than Summit Materials. In addition to that, Alstria Office is 1.45 times more volatile than Summit Materials Cl. It trades about 0.03 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.06 per unit of volatility. If you would invest  3,072  in Summit Materials Cl on September 29, 2024 and sell it today you would earn a total of  1,990  from holding Summit Materials Cl or generate 64.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	92.18%
Values	Daily Returns

alstria office REIT AG  vs.  Summit Materials Cl

alstria office REIT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in alstria office REIT AG are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Alstria Office disclosed solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alstria Office and Summit Materials

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

The idea behind alstria office REIT AG and Summit Materials Cl 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.