Correlation Between ALTEO Energiaszolgalta and 4iG Nyrt

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Can any of the company-specific risk be diversified away by investing in both ALTEO Energiaszolgalta and 4iG Nyrt 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 ALTEO Energiaszolgalta and 4iG Nyrt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALTEO Energiaszolgaltato Nyrt and 4iG Nyrt, you can compare the effects of market volatilities on ALTEO Energiaszolgalta and 4iG Nyrt 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 ALTEO Energiaszolgalta with a short position of 4iG Nyrt. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALTEO Energiaszolgalta and 4iG Nyrt.

Diversification Opportunities for ALTEO Energiaszolgalta and 4iG Nyrt

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between ALTEO and 4iG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ALTEO Energiaszolgaltato Nyrt and 4iG Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4iG Nyrt and ALTEO Energiaszolgalta 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 ALTEO Energiaszolgaltato Nyrt are associated (or correlated) with 4iG Nyrt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4iG Nyrt has no effect on the direction of ALTEO Energiaszolgalta i.e., ALTEO Energiaszolgalta and 4iG Nyrt go up and down completely randomly.

Pair Corralation between ALTEO Energiaszolgalta and 4iG Nyrt

Assuming the 90 days trading horizon ALTEO Energiaszolgaltato Nyrt is expected to under-perform the 4iG Nyrt. But the stock apears to be less risky and, when comparing its historical volatility, ALTEO Energiaszolgaltato Nyrt is 2.83 times less risky than 4iG Nyrt. The stock trades about -0.36 of its potential returns per unit of risk. The 4iG Nyrt is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  80,000  in 4iG Nyrt on September 18, 2024 and sell it today you would earn a total of  7,500  from holding 4iG Nyrt or generate 9.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ALTEO Energiaszolgaltato Nyrt  vs.  4iG Nyrt

 Performance 
       Timeline  
ALTEO Energiaszolgalta 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days ALTEO Energiaszolgaltato Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
4iG Nyrt 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days 4iG Nyrt has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak fundamental indicators, 4iG Nyrt exhibited solid returns over the last few months and may actually be approaching a breakup point.

ALTEO Energiaszolgalta and 4iG Nyrt Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ALTEO Energiaszolgalta and 4iG Nyrt

The main advantage of trading using opposite ALTEO Energiaszolgalta and 4iG Nyrt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALTEO Energiaszolgalta position performs unexpectedly, 4iG Nyrt 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 4iG Nyrt will offset losses from the drop in 4iG Nyrt's long position.
The idea behind ALTEO Energiaszolgaltato Nyrt and 4iG Nyrt 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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