Correlation Between Alpha Trust and Bioter SA

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

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

Diversification Opportunities for Alpha Trust and Bioter SA

0.36

Correlation Coefficient

Alpha Trust  Bioter SA

Weak diversification

The 3 months correlation between Alpha and Bioter is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Trust Mutual and Bioter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioter SA and Alpha Trust 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 Alpha Trust Mutual are associated (or correlated) with Bioter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioter SA has no effect on the direction of Alpha Trust i.e., Alpha Trust and Bioter SA go up and down completely randomly.

Pair Corralation between Alpha Trust and Bioter SA

Assuming the 90 days trading horizon Alpha Trust is expected to generate 27.14 times less return on investment than Bioter SA. But when comparing it to its historical volatility, Alpha Trust Mutual is 11.48 times less risky than Bioter SA. It trades about 0.02 of its potential returns per unit of risk. Bioter SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Bioter SA on September 15, 2024 and sell it today you would earn a total of  2.00  from holding Bioter SA or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alpha Trust Mutual  vs.  Bioter SA

Alpha Trust Mutual

Risk-Adjusted Performance

1 of 100

Weak

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

Bioter SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bioter SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bioter SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Trust and Bioter SA

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

The idea behind Alpha Trust Mutual and Bioter 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.