Correlation Between Eutelsat Communications and Alan Allman

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

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

Diversification Opportunities for Eutelsat Communications and Alan Allman

-0.52

Correlation Coefficient

Eutelsat Communications  Alan Allman

Excellent diversification

The 3 months correlation between Eutelsat and Alan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Alan Allman Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alan Allman Associates and Eutelsat Communications 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 Eutelsat Communications SA are associated (or correlated) with Alan Allman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alan Allman Associates has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Alan Allman go up and down completely randomly.

Pair Corralation between Eutelsat Communications and Alan Allman

Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Alan Allman. But the stock apears to be less risky and, when comparing its historical volatility, Eutelsat Communications SA is 4.15 times less risky than Alan Allman. The stock trades about -0.19 of its potential returns per unit of risk. The Alan Allman Associates is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  496.00  in Alan Allman Associates on October 26, 2024 and sell it today you would earn a total of  169.00  from holding Alan Allman Associates or generate 34.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Eutelsat Communications SA  vs.  Alan Allman Associates

Eutelsat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eutelsat Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alan Allman Associates

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alan Allman Associates are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alan Allman sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eutelsat Communications and Alan Allman

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

The idea behind Eutelsat Communications SA and Alan Allman Associates 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.