Correlation Between Galp Energia and Altri SGPS

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

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

Diversification Opportunities for Galp Energia and Altri SGPS

-0.69

Correlation Coefficient

Galp Energia  Altri SGPS

Excellent diversification

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

Pair Corralation between Galp Energia and Altri SGPS

Assuming the 90 days trading horizon Galp Energia SGPS is expected to under-perform the Altri SGPS. In addition to that, Galp Energia is 1.51 times more volatile than Altri SGPS SA. It trades about -0.02 of its total potential returns per unit of risk. Altri SGPS SA is currently generating about 0.17 per unit of volatility. If you would invest  530.00  in Altri SGPS SA on December 30, 2024 and sell it today you would earn a total of  73.00  from holding Altri SGPS SA or generate 13.77% return on investment over 90 days.

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

Galp Energia SGPS  vs.  Altri SGPS SA

Galp Energia SGPS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galp Energia SGPS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Galp Energia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Altri SGPS SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altri SGPS SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Altri SGPS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Galp Energia and Altri SGPS

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

The idea behind Galp Energia SGPS and Altri SGPS 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.