Correlation Between Courtois and Altareit

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

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

Diversification Opportunities for Courtois and Altareit

-0.4

Correlation Coefficient

Courtois  Altareit

Very good diversification

The 3 months correlation between Courtois and Altareit is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Courtois SA and Altareit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altareit and Courtois 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 Courtois SA are associated (or correlated) with Altareit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altareit has no effect on the direction of Courtois i.e., Courtois and Altareit go up and down completely randomly.

Pair Corralation between Courtois and Altareit

Assuming the 90 days trading horizon Courtois SA is expected to generate 7.36 times more return on investment than Altareit. However, Courtois is 7.36 times more volatile than Altareit. It trades about 0.03 of its potential returns per unit of risk. Altareit is currently generating about 0.16 per unit of risk. If you would invest  11,700  in Courtois SA on October 24, 2024 and sell it today you would earn a total of  400.00  from holding Courtois SA or generate 3.42% return on investment over 90 days.

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

Courtois SA  vs.  Altareit

Courtois SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Courtois SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Courtois is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altareit

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Altareit are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Altareit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Courtois and Altareit

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

The idea behind Courtois SA and Altareit 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.