Correlation Between Altarea SCA and Stradim Espace

Can any of the company-specific risk be diversified away by investing in both Altarea SCA and Stradim Espace 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 Altarea SCA and Stradim Espace into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altarea SCA and Stradim Espace Finances, you can compare the effects of market volatilities on Altarea SCA and Stradim Espace 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 Altarea SCA with a short position of Stradim Espace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altarea SCA and Stradim Espace.

Diversification Opportunities for Altarea SCA and Stradim Espace

0.55

Correlation Coefficient

Altarea SCA  Stradim Espace

Very weak diversification

The 3 months correlation between Altarea and Stradim is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Altarea SCA and Stradim Espace Finances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stradim Espace Finances and Altarea SCA 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 Altarea SCA are associated (or correlated) with Stradim Espace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stradim Espace Finances has no effect on the direction of Altarea SCA i.e., Altarea SCA and Stradim Espace go up and down completely randomly.

Pair Corralation between Altarea SCA and Stradim Espace

Assuming the 90 days trading horizon Altarea SCA is expected to under-perform the Stradim Espace. But the stock apears to be less risky and, when comparing its historical volatility, Altarea SCA is 2.54 times less risky than Stradim Espace. The stock trades about 0.0 of its potential returns per unit of risk. The Stradim Espace Finances is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  710.00  in Stradim Espace Finances on October 5, 2024 and sell it today you would lose (150.00) from holding Stradim Espace Finances or give up 21.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.85%
Values	Daily Returns

Altarea SCA  vs.  Stradim Espace Finances

Altarea SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altarea SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Altarea SCA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stradim Espace Finances

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stradim Espace Finances are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Stradim Espace may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Altarea SCA and Stradim Espace

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

The idea behind Altarea SCA and Stradim Espace Finances 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.