Correlation Between Sopra Steria and Alten SA

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

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

Diversification Opportunities for Sopra Steria and Alten SA

0.41

Correlation Coefficient

Sopra Steria  Alten SA

Very weak diversification

The 3 months correlation between Sopra and Alten is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sopra Steria Group and Alten SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alten SA and Sopra Steria 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 Sopra Steria Group are associated (or correlated) with Alten SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alten SA has no effect on the direction of Sopra Steria i.e., Sopra Steria and Alten SA go up and down completely randomly.

Pair Corralation between Sopra Steria and Alten SA

Assuming the 90 days trading horizon Sopra Steria is expected to generate 2.78 times less return on investment than Alten SA. But when comparing it to its historical volatility, Sopra Steria Group is 1.22 times less risky than Alten SA. It trades about 0.04 of its potential returns per unit of risk. Alten SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,735  in Alten SA on December 29, 2024 and sell it today you would earn a total of  1,390  from holding Alten SA or generate 17.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Sopra Steria Group  vs.  Alten SA

Sopra Steria Group

Risk-Adjusted Performance

Insignificant

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

Alten SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alten SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Alten SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sopra Steria and Alten SA

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

The idea behind Sopra Steria Group and Alten 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.