Correlation Between Seadrill and ALTICE

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

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

Diversification Opportunities for Seadrill and ALTICE

-0.63

Correlation Coefficient

Seadrill  ALTICE

Excellent diversification

The 3 months correlation between Seadrill and ALTICE is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Seadrill Limited and ALTICE FRANCE S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTICE FRANCE S and Seadrill 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 Seadrill Limited are associated (or correlated) with ALTICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTICE FRANCE S has no effect on the direction of Seadrill i.e., Seadrill and ALTICE go up and down completely randomly.

Pair Corralation between Seadrill and ALTICE

Given the investment horizon of 90 days Seadrill Limited is expected to under-perform the ALTICE. But the stock apears to be less risky and, when comparing its historical volatility, Seadrill Limited is 1.01 times less risky than ALTICE. The stock trades about -0.22 of its potential returns per unit of risk. The ALTICE FRANCE S is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  7,598  in ALTICE FRANCE S on December 25, 2024 and sell it today you would lose (849.00) from holding ALTICE FRANCE S or give up 11.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	45.0%
Values	Daily Returns

Seadrill Limited  vs.  ALTICE FRANCE S

Seadrill Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seadrill Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ALTICE FRANCE S

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALTICE FRANCE S has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for ALTICE FRANCE S investors.

Pair Trading with Seadrill and ALTICE

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

The idea behind Seadrill Limited and ALTICE FRANCE S 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.