Correlation Between Metalliance and Alstom SA

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

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

Diversification Opportunities for Metalliance and Alstom SA

0.0

Correlation Coefficient

Metalliance  Alstom SA

Pay attention - limited upside

The 3 months correlation between Metalliance and Alstom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metalliance SA and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA and Metalliance 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 Metalliance SA are associated (or correlated) with Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Metalliance i.e., Metalliance and Alstom SA go up and down completely randomly.

Pair Corralation between Metalliance and Alstom SA

If you would invest  2,163  in Alstom SA on December 30, 2024 and sell it today you would lose (78.00) from holding Alstom SA or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Metalliance SA  vs.  Alstom SA

Metalliance SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalliance SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Metalliance is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Alstom SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alstom SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alstom SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metalliance and Alstom SA

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

The idea behind Metalliance SA and Alstom 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.