Correlation Between Altareit and Artois Nom

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

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

Diversification Opportunities for Altareit and Artois Nom

0.89

Correlation Coefficient

Altareit  Artois Nom

Very poor diversification

The 3 months correlation between Altareit and Artois is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Altareit and Artois Nom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artois Nom and Altareit 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 Altareit are associated (or correlated) with Artois Nom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artois Nom has no effect on the direction of Altareit i.e., Altareit and Artois Nom go up and down completely randomly.

Pair Corralation between Altareit and Artois Nom

Assuming the 90 days trading horizon Altareit is expected to generate 17.83 times less return on investment than Artois Nom. But when comparing it to its historical volatility, Altareit is 22.83 times less risky than Artois Nom. It trades about 0.16 of its potential returns per unit of risk. Artois Nom is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  560,000  in Artois Nom on September 3, 2024 and sell it today you would earn a total of  395,000  from holding Artois Nom or generate 70.54% return on investment over 90 days.

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

Altareit  vs.  Artois Nom

Altareit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altareit are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altareit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Artois Nom

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Artois Nom are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Artois Nom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altareit and Artois Nom

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

The idea behind Altareit and Artois Nom 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.