Correlation Between Alrov Properties and Satcom Systems

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

By analyzing existing cross correlation between Alrov Properties Lodgings and Satcom Systems, you can compare the effects of market volatilities on Alrov Properties and Satcom Systems 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 Alrov Properties with a short position of Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alrov Properties and Satcom Systems.

Diversification Opportunities for Alrov Properties and Satcom Systems

-0.18

Correlation Coefficient

Alrov Properties  Satcom Systems

Good diversification

The 3 months correlation between Alrov and Satcom is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alrov Properties Lodgings and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems and Alrov Properties 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 Alrov Properties Lodgings are associated (or correlated) with Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of Alrov Properties i.e., Alrov Properties and Satcom Systems go up and down completely randomly.

Pair Corralation between Alrov Properties and Satcom Systems

Assuming the 90 days trading horizon Alrov Properties Lodgings is expected to generate 0.79 times more return on investment than Satcom Systems. However, Alrov Properties Lodgings is 1.27 times less risky than Satcom Systems. It trades about 0.05 of its potential returns per unit of risk. Satcom Systems is currently generating about -0.04 per unit of risk. If you would invest  1,867,000  in Alrov Properties Lodgings on December 22, 2024 and sell it today you would earn a total of  82,000  from holding Alrov Properties Lodgings or generate 4.39% return on investment over 90 days.

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

Alrov Properties Lodgings  vs.  Satcom Systems

Alrov Properties Lodgings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alrov Properties Lodgings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alrov Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Satcom Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Satcom Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Alrov Properties and Satcom Systems

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

The idea behind Alrov Properties Lodgings and Satcom Systems 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.