Correlation Between Alm Brand and Matas AS

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

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

Diversification Opportunities for Alm Brand and Matas AS

0.47

Correlation Coefficient

Alm Brand  Matas AS

Very weak diversification

The 3 months correlation between Alm and Matas is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and Alm Brand 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 Alm Brand are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of Alm Brand i.e., Alm Brand and Matas AS go up and down completely randomly.

Pair Corralation between Alm Brand and Matas AS

Assuming the 90 days trading horizon Alm Brand is expected to generate 0.8 times more return on investment than Matas AS. However, Alm Brand is 1.25 times less risky than Matas AS. It trades about 0.16 of its potential returns per unit of risk. Matas AS is currently generating about 0.03 per unit of risk. If you would invest  1,218  in Alm Brand on September 3, 2024 and sell it today you would earn a total of  149.00  from holding Alm Brand or generate 12.23% return on investment over 90 days.

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

Alm Brand  vs.  Matas AS

Alm Brand

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alm Brand are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alm Brand may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Matas AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matas AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alm Brand and Matas AS

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

The idea behind Alm Brand and Matas AS 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..