Correlation Between Alten SA and Socit BIC

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

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

Diversification Opportunities for Alten SA and Socit BIC

-0.4

Correlation Coefficient

Alten SA  Socit BIC

Very good diversification

The 3 months correlation between Alten and Socit is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alten SA and Socit BIC SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socit BIC SA and Alten SA 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 Alten SA are associated (or correlated) with Socit BIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socit BIC SA has no effect on the direction of Alten SA i.e., Alten SA and Socit BIC go up and down completely randomly.

Pair Corralation between Alten SA and Socit BIC

Assuming the 90 days trading horizon Alten SA is expected to generate 2.68 times more return on investment than Socit BIC. However, Alten SA is 2.68 times more volatile than Socit BIC SA. It trades about 0.12 of its potential returns per unit of risk. Socit BIC SA is currently generating about -0.05 per unit of risk. If you would invest  7,830  in Alten SA on December 26, 2024 and sell it today you would earn a total of  1,725  from holding Alten SA or generate 22.03% return on investment over 90 days.

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

Alten SA  vs.  Socit BIC SA

Alten SA

Risk-Adjusted Performance

OK

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

Socit BIC SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Alten SA and Socit BIC

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

The idea behind Alten SA and Socit BIC SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.