Correlation Between Alten SA and SEB SA

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

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

Diversification Opportunities for Alten SA and SEB SA

0.5

Correlation Coefficient

Alten SA  SEB SA

Very weak diversification

The 3 months correlation between Alten and SEB is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alten SA and SEB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEB 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 SEB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEB SA has no effect on the direction of Alten SA i.e., Alten SA and SEB SA go up and down completely randomly.

Pair Corralation between Alten SA and SEB SA

Assuming the 90 days trading horizon Alten SA is expected to generate 1.46 times more return on investment than SEB SA. However, Alten SA is 1.46 times more volatile than SEB SA. It trades about 0.12 of its potential returns per unit of risk. SEB SA is currently generating about 0.02 per unit of risk. If you would invest  7,735  in Alten SA on December 28, 2024 and sell it today you would earn a total of  1,715  from holding Alten SA or generate 22.17% return on investment over 90 days.

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

Alten SA  vs.  SEB 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.

SEB SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SEB SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SEB SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alten SA and SEB SA

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

The idea behind Alten SA and SEB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.