Correlation Between Alten SA and Wavestone

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

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

Diversification Opportunities for Alten SA and Wavestone

0.81

Correlation Coefficient

Alten SA  Wavestone

Very poor diversification

The 3 months correlation between Alten and Wavestone is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alten SA and Wavestone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wavestone 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 Wavestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wavestone SA has no effect on the direction of Alten SA i.e., Alten SA and Wavestone go up and down completely randomly.

Pair Corralation between Alten SA and Wavestone

Assuming the 90 days trading horizon Alten SA is expected to generate 1.29 times more return on investment than Wavestone. However, Alten SA is 1.29 times more volatile than Wavestone SA. It trades about 0.09 of its potential returns per unit of risk. Wavestone SA is currently generating about 0.09 per unit of risk. If you would invest  7,905  in Alten SA on December 31, 2024 and sell it today you would earn a total of  1,220  from holding Alten SA or generate 15.43% return on investment over 90 days.

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

Alten SA  vs.  Wavestone SA

Alten SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alten SA are ranked lower than 6 (%) 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.

Wavestone SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wavestone SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wavestone sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alten SA and Wavestone

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

The idea behind Alten SA and Wavestone 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..