Correlation Between Marstons PLC and Alsea SAB

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

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

Diversification Opportunities for Marstons PLC and Alsea SAB

0.34

Correlation Coefficient

Marstons PLC  Alsea SAB

Weak diversification

The 3 months correlation between Marstons and Alsea is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de and Marstons PLC 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 Marstons PLC are associated (or correlated) with Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Marstons PLC i.e., Marstons PLC and Alsea SAB go up and down completely randomly.

Pair Corralation between Marstons PLC and Alsea SAB

Assuming the 90 days horizon Marstons PLC is expected to generate 0.9 times more return on investment than Alsea SAB. However, Marstons PLC is 1.12 times less risky than Alsea SAB. It trades about 0.03 of its potential returns per unit of risk. Alsea SAB de is currently generating about 0.02 per unit of risk. If you would invest  428.00  in Marstons PLC on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Marstons PLC or generate 3.5% return on investment over 90 days.

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

Marstons PLC  vs.  Alsea SAB de

Marstons PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Marstons PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alsea SAB de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alsea SAB de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Alsea SAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Marstons PLC and Alsea SAB

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

The idea behind Marstons PLC and Alsea SAB de 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.