Correlation Between ALERION CLEANPOWER and Philip Morris

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

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

Diversification Opportunities for ALERION CLEANPOWER and Philip Morris

-0.69

Correlation Coefficient

ALERION CLEANPOWER  Philip Morris

Excellent diversification

The 3 months correlation between ALERION and Philip is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Philip Morris go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and Philip Morris

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Philip Morris. In addition to that, ALERION CLEANPOWER is 1.86 times more volatile than Philip Morris International. It trades about -0.01 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.19 per unit of volatility. If you would invest  11,523  in Philip Morris International on December 21, 2024 and sell it today you would earn a total of  2,497  from holding Philip Morris International or generate 21.67% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  Philip Morris International

ALERION CLEANPOWER

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALERION CLEANPOWER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALERION CLEANPOWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Philip Morris Intern

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Philip Morris reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALERION CLEANPOWER and Philip Morris

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

The idea behind ALERION CLEANPOWER and Philip Morris 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.