Correlation Between Almacenes Xito and Albany International

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

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

Diversification Opportunities for Almacenes Xito and Albany International

-0.53

Correlation Coefficient

Almacenes Xito  Albany International

Excellent diversification

The 3 months correlation between Almacenes and Albany is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and Albany International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albany International and Almacenes Xito 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 Almacenes xito SA are associated (or correlated) with Albany International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albany International has no effect on the direction of Almacenes Xito i.e., Almacenes Xito and Albany International go up and down completely randomly.

Pair Corralation between Almacenes Xito and Albany International

Given the investment horizon of 90 days Almacenes xito SA is expected to under-perform the Albany International. But the stock apears to be less risky and, when comparing its historical volatility, Almacenes xito SA is 1.32 times less risky than Albany International. The stock trades about -0.05 of its potential returns per unit of risk. The Albany International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8,544  in Albany International on September 13, 2024 and sell it today you would lose (353.00) from holding Albany International or give up 4.13% of portfolio value over 90 days.

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

Almacenes xito SA  vs.  Albany International

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Albany International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albany International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Albany International is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Almacenes Xito and Albany International

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

The idea behind Almacenes xito SA and Albany International 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.