Correlation Between Alumil Aluminium and Bioter SA

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

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

Diversification Opportunities for Alumil Aluminium and Bioter SA

-0.54

Correlation Coefficient

Alumil Aluminium  Bioter SA

Excellent diversification

The 3 months correlation between Alumil and Bioter is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alumil Aluminium Industry and Bioter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioter SA and Alumil Aluminium 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 Alumil Aluminium Industry are associated (or correlated) with Bioter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioter SA has no effect on the direction of Alumil Aluminium i.e., Alumil Aluminium and Bioter SA go up and down completely randomly.

Pair Corralation between Alumil Aluminium and Bioter SA

Assuming the 90 days trading horizon Alumil Aluminium Industry is expected to generate 0.55 times more return on investment than Bioter SA. However, Alumil Aluminium Industry is 1.81 times less risky than Bioter SA. It trades about 0.2 of its potential returns per unit of risk. Bioter SA is currently generating about -0.06 per unit of risk. If you would invest  323.00  in Alumil Aluminium Industry on October 20, 2024 and sell it today you would earn a total of  88.00  from holding Alumil Aluminium Industry or generate 27.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Alumil Aluminium Industry  vs.  Bioter SA

Alumil Aluminium Industry

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alumil Aluminium Industry are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumil Aluminium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bioter SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alumil Aluminium and Bioter SA

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

The idea behind Alumil Aluminium Industry and Bioter 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..