Correlation Between Alstom SA and Methanor
Can any of the company-specific risk be diversified away by investing in both Alstom SA and Methanor 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 Alstom SA and Methanor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alstom SA and Methanor, you can compare the effects of market volatilities on Alstom SA and Methanor 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 Alstom SA with a short position of Methanor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and Methanor.
Diversification Opportunities for Alstom SA and Methanor
Excellent diversification
The 3 months correlation between Alstom and Methanor is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Alstom SA 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 Alstom SA are associated (or correlated) with Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Alstom SA i.e., Alstom SA and Methanor go up and down completely randomly.
Pair Corralation between Alstom SA and Methanor
Assuming the 90 days trading horizon Alstom SA is expected to generate 1.03 times more return on investment than Methanor. However, Alstom SA is 1.03 times more volatile than Methanor. It trades about 0.01 of its potential returns per unit of risk. Methanor is currently generating about -0.04 per unit of risk. If you would invest 2,287 in Alstom SA on September 25, 2024 and sell it today you would lose (103.00) from holding Alstom SA or give up 4.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alstom SA vs. Methanor
Performance |
Timeline |
Alstom SA |
Methanor |
Alstom SA and Methanor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alstom SA and Methanor
The main advantage of trading using opposite Alstom SA and Methanor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstom SA position performs unexpectedly, Methanor 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 Methanor will offset losses from the drop in Methanor's long position.Alstom SA vs. Bouygues SA | Alstom SA vs. Compagnie de Saint Gobain | Alstom SA vs. Veolia Environnement VE | Alstom SA vs. Vinci SA |
Methanor vs. Voltalia SA | Methanor vs. Ecoslops SA | Methanor vs. Agripower France Sa | Methanor vs. Glob Bioenergi |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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