Correlation Between Alstom SA and Gecina SA
Can any of the company-specific risk be diversified away by investing in both Alstom SA and Gecina SA 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 Gecina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alstom SA and Gecina SA, you can compare the effects of market volatilities on Alstom SA and Gecina SA 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 Gecina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and Gecina SA.
Diversification Opportunities for Alstom SA and Gecina SA
Excellent diversification
The 3 months correlation between Alstom and Gecina is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA 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 Gecina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gecina SA has no effect on the direction of Alstom SA i.e., Alstom SA and Gecina SA go up and down completely randomly.
Pair Corralation between Alstom SA and Gecina SA
Assuming the 90 days trading horizon Alstom SA is expected to generate 2.23 times more return on investment than Gecina SA. However, Alstom SA is 2.23 times more volatile than Gecina SA. It trades about 0.1 of its potential returns per unit of risk. Gecina SA is currently generating about -0.22 per unit of risk. If you would invest 1,893 in Alstom SA on August 28, 2024 and sell it today you would earn a total of 197.00 from holding Alstom SA or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alstom SA vs. Gecina SA
Performance |
| Timeline |
| Alstom SA |
| Gecina SA |
Alstom SA and Gecina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstom SA and Gecina SA
The main advantage of trading using opposite Alstom SA and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstom SA position performs unexpectedly, Gecina SA 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 Gecina SA will offset losses from the drop in Gecina SA'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 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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