Correlation Between Superior Plus and ALD SA

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

Diversification Opportunities for Superior Plus and ALD SA

-0.1

Correlation Coefficient

Superior Plus  ALD SA

Good diversification

The 3 months correlation between Superior and ALD is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and ALD SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALD SA 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 ALD SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALD SA has no effect on the direction of Superior Plus i.e., Superior Plus and ALD SA go up and down completely randomly.

Pair Corralation between Superior Plus and ALD SA

Assuming the 90 days horizon Superior Plus is expected to generate 9.09 times less return on investment than ALD SA. But when comparing it to its historical volatility, Superior Plus Corp is 1.02 times less risky than ALD SA. It trades about 0.03 of its potential returns per unit of risk. ALD SA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  610.00  in ALD SA on December 20, 2024 and sell it today you would earn a total of  191.00  from holding ALD SA or generate 31.31% return on investment over 90 days.

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

Superior Plus Corp  vs.  ALD SA

Superior Plus Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Plus Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Superior Plus is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ALD SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALD SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALD SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Plus and ALD SA

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

The idea behind Superior Plus Corp and ALD SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.