Correlation Between BerolinaCapital Premium and ALM ES

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

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

Diversification Opportunities for BerolinaCapital Premium and ALM ES

0.66

Correlation Coefficient

BerolinaCapital Premium  ALM ES

Poor diversification

The 3 months correlation between BerolinaCapital and ALM is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BerolinaCapital Premium and ALM ES Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM ES Actions and BerolinaCapital Premium 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 BerolinaCapital Premium are associated (or correlated) with ALM ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM ES Actions has no effect on the direction of BerolinaCapital Premium i.e., BerolinaCapital Premium and ALM ES go up and down completely randomly.

Pair Corralation between BerolinaCapital Premium and ALM ES

Assuming the 90 days trading horizon BerolinaCapital Premium is expected to generate 1.22 times more return on investment than ALM ES. However, BerolinaCapital Premium is 1.22 times more volatile than ALM ES Actions. It trades about 0.11 of its potential returns per unit of risk. ALM ES Actions is currently generating about 0.07 per unit of risk. If you would invest  9,025  in BerolinaCapital Premium on October 25, 2024 and sell it today you would earn a total of  500.00  from holding BerolinaCapital Premium or generate 5.54% return on investment over 90 days.

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

BerolinaCapital Premium  vs.  ALM ES Actions

BerolinaCapital Premium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BerolinaCapital Premium are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable fundamental indicators, BerolinaCapital Premium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ALM ES Actions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALM ES Actions are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, ALM ES is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BerolinaCapital Premium and ALM ES

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

The idea behind BerolinaCapital Premium and ALM ES Actions 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.