Correlation Between Alta SA and APS Energia
Can any of the company-specific risk be diversified away by investing in both Alta SA and APS Energia 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 Alta SA and APS Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta SA and APS Energia SA, you can compare the effects of market volatilities on Alta SA and APS Energia 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 Alta SA with a short position of APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta SA and APS Energia.
Diversification Opportunities for Alta SA and APS Energia
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alta and APS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alta SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia SA and Alta 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 Alta SA are associated (or correlated) with APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of Alta SA i.e., Alta SA and APS Energia go up and down completely randomly.
Pair Corralation between Alta SA and APS Energia
Assuming the 90 days trading horizon Alta SA is expected to generate 4.72 times less return on investment than APS Energia. But when comparing it to its historical volatility, Alta SA is 1.27 times less risky than APS Energia. It trades about 0.06 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 230.00 in APS Energia SA on August 29, 2024 and sell it today you would earn a total of 40.00 from holding APS Energia SA or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta SA vs. APS Energia SA
Performance |
| Timeline |
| Alta SA |
| APS Energia SA |
Alta SA and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta SA and APS Energia
The main advantage of trading using opposite Alta SA and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta SA position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.| Alta SA vs. PMPG Polskie Media | Alta SA vs. Echo Investment SA | Alta SA vs. Creotech Instruments SA | Alta SA vs. Tower Investments SA |
| APS Energia vs. Asseco Business Solutions | APS Energia vs. Detalion Games SA | APS Energia vs. Asseco South Eastern | APS Energia vs. Vercom SA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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