Correlation Between Aubay Socit and Alten SA

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

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

Diversification Opportunities for Aubay Socit and Alten SA

0.38

Correlation Coefficient

Aubay Socit  Alten SA

Weak diversification

The 3 months correlation between Aubay and Alten is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aubay Socit Anonyme and Alten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alten SA and Aubay Socit 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 Aubay Socit Anonyme are associated (or correlated) with Alten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alten SA has no effect on the direction of Aubay Socit i.e., Aubay Socit and Alten SA go up and down completely randomly.

Pair Corralation between Aubay Socit and Alten SA

Assuming the 90 days trading horizon Aubay Socit is expected to generate 5.42 times less return on investment than Alten SA. But when comparing it to its historical volatility, Aubay Socit Anonyme is 1.78 times less risky than Alten SA. It trades about 0.04 of its potential returns per unit of risk. Alten SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,480  in Alten SA on December 2, 2024 and sell it today you would earn a total of  1,290  from holding Alten SA or generate 17.25% return on investment over 90 days.

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

Aubay Socit Anonyme  vs.  Alten SA

Aubay Socit Anonyme

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aubay Socit Anonyme are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Aubay Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Aubay Socit and Alten SA

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

The idea behind Aubay Socit Anonyme and Alten 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 Stocks Directory module to find actively traded stocks across global markets.