Correlation Between Alstom SA and Vallourec
Can any of the company-specific risk be diversified away by investing in both Alstom SA and Vallourec 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 Vallourec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alstom SA and Vallourec, you can compare the effects of market volatilities on Alstom SA and Vallourec 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 Vallourec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and Vallourec.
Diversification Opportunities for Alstom SA and Vallourec
Very good diversification
The 3 months correlation between Alstom and Vallourec is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec 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 Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Alstom SA i.e., Alstom SA and Vallourec go up and down completely randomly.
Pair Corralation between Alstom SA and Vallourec
Assuming the 90 days trading horizon Alstom SA is expected to under-perform the Vallourec. In addition to that, Alstom SA is 1.04 times more volatile than Vallourec. It trades about -0.36 of its total potential returns per unit of risk. Vallourec is currently generating about 0.23 per unit of volatility. If you would invest 1,688 in Vallourec on November 5, 2024 and sell it today you would earn a total of 151.00 from holding Vallourec or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alstom SA vs. Vallourec
Performance |
| Timeline |
| Alstom SA |
| Vallourec |
Alstom SA and Vallourec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstom SA and Vallourec
The main advantage of trading using opposite Alstom SA and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstom SA position performs unexpectedly, Vallourec 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 Vallourec will offset losses from the drop in Vallourec'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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