Correlation Between Alstom SA and Bastide Le

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

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

Diversification Opportunities for Alstom SA and Bastide Le

0.52

Correlation Coefficient

Alstom SA  Bastide Le

Very weak diversification

The 3 months correlation between Alstom and Bastide is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Bastide Le Confort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bastide Le Confort and Alstom 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 Alstom SA are associated (or correlated) with Bastide Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bastide Le Confort has no effect on the direction of Alstom SA i.e., Alstom SA and Bastide Le go up and down completely randomly.

Pair Corralation between Alstom SA and Bastide Le

Assuming the 90 days trading horizon Alstom SA is expected to generate 146.43 times less return on investment than Bastide Le. In addition to that, Alstom SA is 1.59 times more volatile than Bastide Le Confort. It trades about 0.0 of its total potential returns per unit of risk. Bastide Le Confort is currently generating about 0.09 per unit of volatility. If you would invest  2,435  in Bastide Le Confort on December 30, 2024 and sell it today you would earn a total of  305.00  from holding Bastide Le Confort or generate 12.53% return on investment over 90 days.

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

Alstom SA  vs.  Bastide Le Confort

Alstom SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alstom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alstom SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bastide Le Confort

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bastide Le Confort are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bastide Le sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alstom SA and Bastide Le

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

The idea behind Alstom SA and Bastide Le Confort 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.