Correlation Between Superior Plus and ALM Offensif

Can any of the company-specific risk be diversified away by investing in both Superior Plus and ALM Offensif 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 Superior Plus and ALM Offensif into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Superior Plus Corp and ALM Offensif, you can compare the effects of market volatilities on Superior Plus and ALM Offensif 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 Superior Plus with a short position of ALM Offensif. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and ALM Offensif.

Diversification Opportunities for Superior Plus and ALM Offensif

-0.4

Correlation Coefficient

Superior Plus  ALM Offensif

Very good diversification

The 3 months correlation between Superior and ALM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and ALM Offensif in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Offensif and Superior Plus 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 Superior Plus Corp are associated (or correlated) with ALM Offensif. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Offensif has no effect on the direction of Superior Plus i.e., Superior Plus and ALM Offensif go up and down completely randomly.

Pair Corralation between Superior Plus and ALM Offensif

Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the ALM Offensif. In addition to that, Superior Plus is 4.75 times more volatile than ALM Offensif. It trades about -0.11 of its total potential returns per unit of risk. ALM Offensif is currently generating about -0.14 per unit of volatility. If you would invest  32,319  in ALM Offensif on October 9, 2024 and sell it today you would lose (272.00) from holding ALM Offensif or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Superior Plus Corp  vs.  ALM Offensif

Superior Plus Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Superior Plus Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ALM Offensif

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALM Offensif are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, ALM Offensif is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Superior Plus and ALM Offensif

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

The idea behind Superior Plus Corp and ALM Offensif 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.