Correlation Between Altri SGPS and Ramada Investimentos

Can any of the company-specific risk be diversified away by investing in both Altri SGPS and Ramada Investimentos 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 Altri SGPS and Ramada Investimentos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altri SGPS SA and Ramada Investimentos e, you can compare the effects of market volatilities on Altri SGPS and Ramada Investimentos 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 Altri SGPS with a short position of Ramada Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altri SGPS and Ramada Investimentos.

Diversification Opportunities for Altri SGPS and Ramada Investimentos

0.28

Correlation Coefficient

Altri SGPS  Ramada Investimentos

Modest diversification

The 3 months correlation between Altri and Ramada is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Altri SGPS SA and Ramada Investimentos e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ramada Investimentos and Altri SGPS 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 Altri SGPS SA are associated (or correlated) with Ramada Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ramada Investimentos has no effect on the direction of Altri SGPS i.e., Altri SGPS and Ramada Investimentos go up and down completely randomly.

Pair Corralation between Altri SGPS and Ramada Investimentos

Assuming the 90 days trading horizon Altri SGPS is expected to generate 1.9 times less return on investment than Ramada Investimentos. But when comparing it to its historical volatility, Altri SGPS SA is 2.51 times less risky than Ramada Investimentos. It trades about 0.09 of its potential returns per unit of risk. Ramada Investimentos e is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  603.00  in Ramada Investimentos e on September 16, 2024 and sell it today you would earn a total of  63.00  from holding Ramada Investimentos e or generate 10.45% return on investment over 90 days.

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

Altri SGPS SA  vs.  Ramada Investimentos e

Altri SGPS SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altri SGPS SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Altri SGPS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ramada Investimentos

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ramada Investimentos e are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Ramada Investimentos may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Altri SGPS and Ramada Investimentos

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

The idea behind Altri SGPS SA and Ramada Investimentos e 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.