Correlation Between Alstom SA and Metalliance

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

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

Diversification Opportunities for Alstom SA and Metalliance

0.0

Correlation Coefficient

Alstom SA  Metalliance

Pay attention - limited upside

The 3 months correlation between Alstom and Metalliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Metalliance SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalliance 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 Metalliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalliance SA has no effect on the direction of Alstom SA i.e., Alstom SA and Metalliance go up and down completely randomly.

Pair Corralation between Alstom SA and Metalliance

If you would invest  2,115  in Alstom SA on December 4, 2024 and sell it today you would lose (5.00) from holding Alstom SA or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alstom SA  vs.  Metalliance SA

Alstom SA

Risk-Adjusted Performance

Insignificant

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.

Metalliance SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalliance SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Metalliance is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Alstom SA and Metalliance

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

The idea behind Alstom SA and Metalliance 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 CEOs Directory module to screen CEOs from public companies around the world.