Correlation Between ALM Equity and Logistea A

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

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

Diversification Opportunities for ALM Equity and Logistea A

0.82

Correlation Coefficient

ALM Equity  Logistea A

Very poor diversification

The 3 months correlation between ALM and Logistea is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Logistea A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logistea A and ALM Equity 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 ALM Equity AB are associated (or correlated) with Logistea A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logistea A has no effect on the direction of ALM Equity i.e., ALM Equity and Logistea A go up and down completely randomly.

Pair Corralation between ALM Equity and Logistea A

Assuming the 90 days trading horizon ALM Equity AB is expected to under-perform the Logistea A. In addition to that, ALM Equity is 1.85 times more volatile than Logistea A. It trades about -0.2 of its total potential returns per unit of risk. Logistea A is currently generating about -0.13 per unit of volatility. If you would invest  1,555  in Logistea A on December 30, 2024 and sell it today you would lose (225.00) from holding Logistea A or give up 14.47% of portfolio value over 90 days.

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

ALM Equity AB  vs.  Logistea A

ALM Equity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALM Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Logistea A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logistea A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ALM Equity and Logistea A

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

The idea behind ALM Equity AB and Logistea A 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.