Correlation Between Alro Slatina and Aages SA

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

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

Diversification Opportunities for Alro Slatina and Aages SA

0.58

Correlation Coefficient

Alro Slatina  Aages SA

Very weak diversification

The 3 months correlation between Alro and Aages is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alro Slatina and Aages SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aages SA and Alro Slatina 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 Alro Slatina are associated (or correlated) with Aages SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aages SA has no effect on the direction of Alro Slatina i.e., Alro Slatina and Aages SA go up and down completely randomly.

Pair Corralation between Alro Slatina and Aages SA

Assuming the 90 days trading horizon Alro Slatina is expected to generate 1.35 times less return on investment than Aages SA. But when comparing it to its historical volatility, Alro Slatina is 1.29 times less risky than Aages SA. It trades about 0.18 of its potential returns per unit of risk. Aages SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Aages SA on December 2, 2024 and sell it today you would earn a total of  55.00  from holding Aages SA or generate 8.8% return on investment over 90 days.

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

Alro Slatina  vs.  Aages SA

Alro Slatina

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alro Slatina are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alro Slatina may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aages SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aages SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Aages SA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alro Slatina and Aages SA

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

The idea behind Alro Slatina and Aages 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.

Check out your portfolio center.

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.