Correlation Between Applied Materials and Alstria Office

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

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

Diversification Opportunities for Applied Materials and Alstria Office

-0.74

Correlation Coefficient

Applied Materials  Alstria Office

Pay attention - limited upside

The 3 months correlation between Applied and Alstria is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Applied Materials 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 Applied Materials are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Applied Materials i.e., Applied Materials and Alstria Office go up and down completely randomly.

Pair Corralation between Applied Materials and Alstria Office

Assuming the 90 days trading horizon Applied Materials is expected to under-perform the Alstria Office. But the stock apears to be less risky and, when comparing its historical volatility, Applied Materials is 1.63 times less risky than Alstria Office. The stock trades about -0.1 of its potential returns per unit of risk. The alstria office REIT AG is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  584.00  in alstria office REIT AG on October 5, 2024 and sell it today you would lose (53.00) from holding alstria office REIT AG or give up 9.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Applied Materials  vs.  alstria office REIT AG

Applied Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

alstria office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days alstria office REIT AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Alstria Office is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Applied Materials and Alstria Office

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

The idea behind Applied Materials and alstria office REIT AG 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.