Correlation Between Altisource Asset and Patria Investments

Can any of the company-specific risk be diversified away by investing in both Altisource Asset and Patria Investments 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 Altisource Asset and Patria Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altisource Asset Management and Patria Investments, you can compare the effects of market volatilities on Altisource Asset and Patria Investments 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 Altisource Asset with a short position of Patria Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altisource Asset and Patria Investments.

Diversification Opportunities for Altisource Asset and Patria Investments

0.6

Correlation Coefficient

Altisource Asset  Patria Investments

Poor diversification

The 3 months correlation between Altisource and Patria is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Altisource Asset Management and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and Altisource Asset 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 Altisource Asset Management are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Altisource Asset i.e., Altisource Asset and Patria Investments go up and down completely randomly.

Pair Corralation between Altisource Asset and Patria Investments

If you would invest  1,108  in Patria Investments on October 22, 2024 and sell it today you would earn a total of  57.00  from holding Patria Investments or generate 5.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.61%
Values	Daily Returns

Altisource Asset Management  vs.  Patria Investments

Altisource Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altisource Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Altisource Asset is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Patria Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Altisource Asset and Patria Investments

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

The idea behind Altisource Asset Management and Patria Investments 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.