Correlation Between Alithya Group and Coveo Solutions

Can any of the company-specific risk be diversified away by investing in both Alithya Group and Coveo Solutions 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 Alithya Group and Coveo Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alithya Group inc and Coveo Solutions, you can compare the effects of market volatilities on Alithya Group and Coveo Solutions 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 Alithya Group with a short position of Coveo Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alithya Group and Coveo Solutions.

Diversification Opportunities for Alithya Group and Coveo Solutions

-0.71

Correlation Coefficient

Alithya Group  Coveo Solutions

Pay attention - limited upside

The 3 months correlation between Alithya and Coveo is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alithya Group inc and Coveo Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coveo Solutions and Alithya Group 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 Alithya Group inc are associated (or correlated) with Coveo Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coveo Solutions has no effect on the direction of Alithya Group i.e., Alithya Group and Coveo Solutions go up and down completely randomly.

Pair Corralation between Alithya Group and Coveo Solutions

Assuming the 90 days trading horizon Alithya Group inc is expected to under-perform the Coveo Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Alithya Group inc is 1.18 times less risky than Coveo Solutions. The stock trades about -0.01 of its potential returns per unit of risk. The Coveo Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  780.00  in Coveo Solutions on September 3, 2024 and sell it today you would lose (49.00) from holding Coveo Solutions or give up 6.28% of portfolio value over 90 days.

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

Alithya Group inc  vs.  Coveo Solutions

Alithya Group inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Coveo Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coveo Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Coveo Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alithya Group and Coveo Solutions

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

The idea behind Alithya Group inc and Coveo Solutions 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.

Check out your portfolio center.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.