Correlation Between Alsea SAB and School Specialty

Can any of the company-specific risk be diversified away by investing in both Alsea SAB and School Specialty 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 School Specialty 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 School Specialty, you can compare the effects of market volatilities on Alsea SAB and School Specialty 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 School Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alsea SAB and School Specialty.

Diversification Opportunities for Alsea SAB and School Specialty

0.0

Correlation Coefficient

Alsea SAB  School Specialty

Pay attention - limited upside

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

Pair Corralation between Alsea SAB and School Specialty

If you would invest  216.00  in Alsea SAB de on December 21, 2024 and sell it today you would lose (5.00) from holding Alsea SAB de or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Alsea SAB de  vs.  School Specialty

Alsea SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alsea SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

School Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days School Specialty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, School Specialty is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alsea SAB and School Specialty

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

The idea behind Alsea SAB de and School Specialty 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.