Correlation Between Alps Electric and Via Optronics

Can any of the company-specific risk be diversified away by investing in both Alps Electric and Via Optronics 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 Alps Electric and Via Optronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alps Electric Co and Via Optronics Ag, you can compare the effects of market volatilities on Alps Electric and Via Optronics 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 Alps Electric with a short position of Via Optronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alps Electric and Via Optronics.

Diversification Opportunities for Alps Electric and Via Optronics

0.64

Correlation Coefficient

Alps Electric  Via Optronics

Poor diversification

The 3 months correlation between Alps and Via is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alps Electric Co and Via Optronics Ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Optronics Ag and Alps Electric 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 Alps Electric Co are associated (or correlated) with Via Optronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Optronics Ag has no effect on the direction of Alps Electric i.e., Alps Electric and Via Optronics go up and down completely randomly.

Pair Corralation between Alps Electric and Via Optronics

If you would invest  2,051  in Alps Electric Co on September 13, 2024 and sell it today you would earn a total of  60.00  from holding Alps Electric Co or generate 2.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	2.33%
Values	Daily Returns

Alps Electric Co  vs.  Via Optronics Ag

Alps Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alps Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Alps Electric is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Via Optronics Ag

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alps Electric and Via Optronics

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

The idea behind Alps Electric Co and Via Optronics Ag 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.