Correlation Between Alternus Energy and Shelf Drilling

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

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

Diversification Opportunities for Alternus Energy and Shelf Drilling

0.83

Correlation Coefficient

Alternus Energy  Shelf Drilling

Very poor diversification

The 3 months correlation between Alternus and Shelf is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Alternus Energy Group and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling and Alternus Energy 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 Alternus Energy Group are associated (or correlated) with Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of Alternus Energy i.e., Alternus Energy and Shelf Drilling go up and down completely randomly.

Pair Corralation between Alternus Energy and Shelf Drilling

Assuming the 90 days trading horizon Alternus Energy Group is expected to under-perform the Shelf Drilling. In addition to that, Alternus Energy is 3.19 times more volatile than Shelf Drilling. It trades about -0.09 of its total potential returns per unit of risk. Shelf Drilling is currently generating about -0.16 per unit of volatility. If you would invest  1,776  in Shelf Drilling on September 14, 2024 and sell it today you would lose (773.00) from holding Shelf Drilling or give up 43.52% of portfolio value over 90 days.

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

Alternus Energy Group  vs.  Shelf Drilling

Alternus Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shelf Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alternus Energy and Shelf Drilling

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

The idea behind Alternus Energy Group and Shelf Drilling 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.