Correlation Between MCI Management and Alta SA

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

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

Diversification Opportunities for MCI Management and Alta SA

0.69

Correlation Coefficient

MCI Management  Alta SA

Poor diversification

The 3 months correlation between MCI and Alta is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Alta SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alta SA and MCI Management 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 MCI Management 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 MCI Management i.e., MCI Management and Alta SA go up and down completely randomly.

Pair Corralation between MCI Management and Alta SA

Assuming the 90 days trading horizon MCI Management is expected to generate 2.08 times less return on investment than Alta SA. But when comparing it to its historical volatility, MCI Management SA is 1.64 times less risky than Alta SA. It trades about 0.04 of its potential returns per unit of risk. Alta SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Alta SA on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Alta SA or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

MCI Management SA  vs.  Alta SA

MCI Management SA

Risk-Adjusted Performance

Weak

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

Alta SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alta SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alta SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MCI Management and Alta SA

The main advantage of trading using opposite MCI Management and Alta SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCI Management 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 MCI Management 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.