Correlation Between Atos SE and Alstom SA

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

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

Diversification Opportunities for Atos SE and Alstom SA

0.77

Correlation Coefficient

Atos SE  Alstom SA

Poor diversification

The 3 months correlation between Atos and Alstom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Atos SE and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA and Atos SE 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 Atos SE are associated (or correlated) with Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Atos SE i.e., Atos SE and Alstom SA go up and down completely randomly.

Pair Corralation between Atos SE and Alstom SA

Assuming the 90 days trading horizon Atos SE is expected to generate 2.12 times more return on investment than Alstom SA. However, Atos SE is 2.12 times more volatile than Alstom SA. It trades about 0.16 of its potential returns per unit of risk. Alstom SA is currently generating about 0.08 per unit of risk. If you would invest  0.21  in Atos SE on December 20, 2024 and sell it today you would earn a total of  0.16  from holding Atos SE or generate 76.19% return on investment over 90 days.

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

Atos SE  vs.  Alstom SA

Atos SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atos SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Atos SE sustained solid returns over the last few months and may actually be approaching a breakup point.

Alstom SA

Risk-Adjusted Performance

Modest

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

Pair Trading with Atos SE and Alstom SA

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

The idea behind Atos SE and Alstom 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.