Correlation Between Altia Consultores and Vale SA

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

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

Diversification Opportunities for Altia Consultores and Vale SA

0.32

Correlation Coefficient

Altia Consultores  Vale SA

Weak diversification

The 3 months correlation between Altia and Vale is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Altia Consultores SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Altia Consultores 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 Altia Consultores SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Altia Consultores i.e., Altia Consultores and Vale SA go up and down completely randomly.

Pair Corralation between Altia Consultores and Vale SA

Assuming the 90 days trading horizon Altia Consultores SA is expected to generate 1.24 times more return on investment than Vale SA. However, Altia Consultores is 1.24 times more volatile than Vale SA. It trades about 0.04 of its potential returns per unit of risk. Vale SA is currently generating about -0.04 per unit of risk. If you would invest  437.00  in Altia Consultores SA on September 14, 2024 and sell it today you would earn a total of  21.00  from holding Altia Consultores SA or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Altia Consultores SA  vs.  Vale SA

Altia Consultores

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altia Consultores SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Altia Consultores may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vale SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vale SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Vale SA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Altia Consultores and Vale SA

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

The idea behind Altia Consultores SA and Vale 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.