Correlation Between Alsea SAB and Bt Brands

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

By analyzing existing cross correlation between Alsea SAB de and Bt Brands, you can compare the effects of market volatilities on Alsea SAB and Bt Brands 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 Alsea SAB with a short position of Bt Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alsea SAB and Bt Brands.

Diversification Opportunities for Alsea SAB and Bt Brands

0.31

Correlation Coefficient

Alsea SAB  Bt Brands

Weak diversification

The 3 months correlation between Alsea and BTBD is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alsea SAB de and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and Alsea SAB 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 Alsea SAB de are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Alsea SAB i.e., Alsea SAB and Bt Brands go up and down completely randomly.

Pair Corralation between Alsea SAB and Bt Brands

Assuming the 90 days horizon Alsea SAB de is expected to generate 0.61 times more return on investment than Bt Brands. However, Alsea SAB de is 1.64 times less risky than Bt Brands. It trades about 0.02 of its potential returns per unit of risk. Bt Brands is currently generating about -0.01 per unit of risk. If you would invest  209.00  in Alsea SAB de on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Alsea SAB de or generate 1.44% return on investment over 90 days.

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

Alsea SAB de  vs.  Bt Brands

Alsea SAB de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alsea SAB de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alsea SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bt Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bt Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alsea SAB and Bt Brands

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

The idea behind Alsea SAB de and Bt Brands 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .