Correlation Between Altur Slatina and Aerostar Bacau

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

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

Diversification Opportunities for Altur Slatina and Aerostar Bacau

0.67

Correlation Coefficient

Altur Slatina  Aerostar Bacau

Poor diversification

The 3 months correlation between Altur and Aerostar is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Altur Slatina and Aerostar Bacau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerostar Bacau and Altur 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 Altur Slatina are associated (or correlated) with Aerostar Bacau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerostar Bacau has no effect on the direction of Altur Slatina i.e., Altur Slatina and Aerostar Bacau go up and down completely randomly.

Pair Corralation between Altur Slatina and Aerostar Bacau

Assuming the 90 days trading horizon Altur Slatina is expected to under-perform the Aerostar Bacau. In addition to that, Altur Slatina is 1.97 times more volatile than Aerostar Bacau. It trades about -0.05 of its total potential returns per unit of risk. Aerostar Bacau is currently generating about -0.04 per unit of volatility. If you would invest  912.00  in Aerostar Bacau on September 13, 2024 and sell it today you would lose (52.00) from holding Aerostar Bacau or give up 5.7% of portfolio value over 90 days.

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

Altur Slatina  vs.  Aerostar Bacau

Altur Slatina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altur Slatina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aerostar Bacau

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Altur Slatina and Aerostar Bacau

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

The idea behind Altur Slatina and Aerostar Bacau 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.