Correlation Between Develia SA and Alta SA

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

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

Diversification Opportunities for Develia SA and Alta SA

-0.12

Correlation Coefficient

Develia SA  Alta SA

Good diversification

The 3 months correlation between Develia and Alta is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Develia SA and Alta SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta SA and Develia SA 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 Develia SA are associated (or correlated) with Alta SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alta SA has no effect on the direction of Develia SA i.e., Develia SA and Alta SA go up and down completely randomly.

Pair Corralation between Develia SA and Alta SA

Assuming the 90 days trading horizon Develia SA is expected to generate 0.64 times more return on investment than Alta SA. However, Develia SA is 1.55 times less risky than Alta SA. It trades about 0.17 of its potential returns per unit of risk. Alta SA is currently generating about 0.03 per unit of risk. If you would invest  551.00  in Develia SA on December 27, 2024 and sell it today you would earn a total of  101.00  from holding Develia SA or generate 18.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Develia SA  vs.  Alta SA

Develia SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Develia SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Develia SA reported solid returns over the last few months and may actually be approaching a breakup point.

Alta SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alta SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Alta SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Develia SA and Alta SA

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

The idea behind Develia SA and Alta 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.