Correlation Between Alstom SA and Maat Pharma

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

By analyzing existing cross correlation between Alstom SA and Maat Pharma SA, you can compare the effects of market volatilities on Alstom SA and Maat Pharma 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 Maat Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and Maat Pharma.

Diversification Opportunities for Alstom SA and Maat Pharma

-0.62

Correlation Coefficient

Alstom SA  Maat Pharma

Excellent diversification

The 3 months correlation between Alstom and Maat is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Maat Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maat Pharma SA 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 Maat Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maat Pharma SA has no effect on the direction of Alstom SA i.e., Alstom SA and Maat Pharma go up and down completely randomly.

Pair Corralation between Alstom SA and Maat Pharma

Assuming the 90 days trading horizon Alstom SA is expected to generate 1.05 times more return on investment than Maat Pharma. However, Alstom SA is 1.05 times more volatile than Maat Pharma SA. It trades about 0.0 of its potential returns per unit of risk. Maat Pharma SA is currently generating about -0.11 per unit of risk. If you would invest  2,163  in Alstom SA on December 29, 2024 and sell it today you would lose (78.00) from holding Alstom SA or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Alstom SA  vs.  Maat Pharma SA

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.

Maat Pharma SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maat Pharma SA 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 basic 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 Alstom SA and Maat Pharma

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

The idea behind Alstom SA and Maat Pharma 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.