Correlation Between Alta SA and Immobile

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

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

Diversification Opportunities for Alta SA and Immobile

-0.36

Correlation Coefficient

Alta SA  Immobile

Very good diversification

The 3 months correlation between Alta and Immobile is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alta SA and Immobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immobile and Alta SA 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 Alta SA are associated (or correlated) with Immobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immobile has no effect on the direction of Alta SA i.e., Alta SA and Immobile go up and down completely randomly.

Pair Corralation between Alta SA and Immobile

Assuming the 90 days trading horizon Alta SA is expected to generate 3.3 times less return on investment than Immobile. But when comparing it to its historical volatility, Alta SA is 1.21 times less risky than Immobile. It trades about 0.04 of its potential returns per unit of risk. Immobile is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  184.00  in Immobile on December 30, 2024 and sell it today you would earn a total of  45.00  from holding Immobile or generate 24.46% return on investment over 90 days.

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

Alta SA  vs.  Immobile

Alta SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alta SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alta SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Immobile

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Immobile are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Immobile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alta SA and Immobile

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

The idea behind Alta SA and Immobile 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.