Correlation Between Almirall and Viscofan

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

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

Diversification Opportunities for Almirall and Viscofan

-0.4

Correlation Coefficient

Almirall  Viscofan

Very good diversification

The 3 months correlation between Almirall and Viscofan is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Almirall SA and Viscofan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viscofan and Almirall 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 Almirall SA are associated (or correlated) with Viscofan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viscofan has no effect on the direction of Almirall i.e., Almirall and Viscofan go up and down completely randomly.

Pair Corralation between Almirall and Viscofan

Assuming the 90 days trading horizon Almirall SA is expected to under-perform the Viscofan. In addition to that, Almirall is 1.29 times more volatile than Viscofan. It trades about -0.02 of its total potential returns per unit of risk. Viscofan is currently generating about -0.02 per unit of volatility. If you would invest  6,172  in Viscofan on September 15, 2024 and sell it today you would lose (102.00) from holding Viscofan or give up 1.65% of portfolio value over 90 days.

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

Almirall SA  vs.  Viscofan

Almirall SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almirall SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Almirall is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Viscofan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viscofan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Viscofan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Almirall and Viscofan

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

The idea behind Almirall SA and Viscofan 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.