Correlation Between Reach Subsea and Alternus Energy
Can any of the company-specific risk be diversified away by investing in both Reach Subsea and Alternus Energy 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 Reach Subsea and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reach Subsea and Alternus Energy Group, you can compare the effects of market volatilities on Reach Subsea and Alternus Energy 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 Reach Subsea with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reach Subsea and Alternus Energy.
Diversification Opportunities for Reach Subsea and Alternus Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Reach and Alternus is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Reach Subsea and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and Reach Subsea 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 Reach Subsea are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Reach Subsea i.e., Reach Subsea and Alternus Energy go up and down completely randomly.
Pair Corralation between Reach Subsea and Alternus Energy
Assuming the 90 days trading horizon Reach Subsea is expected to generate 0.17 times more return on investment than Alternus Energy. However, Reach Subsea is 5.8 times less risky than Alternus Energy. It trades about -0.07 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.19 per unit of risk. If you would invest 934.00 in Reach Subsea on September 1, 2024 and sell it today you would lose (46.00) from holding Reach Subsea or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reach Subsea vs. Alternus Energy Group
Performance |
| Timeline |
| Reach Subsea |
| Alternus Energy Group |
Reach Subsea and Alternus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reach Subsea and Alternus Energy
The main advantage of trading using opposite Reach Subsea and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reach Subsea position performs unexpectedly, Alternus Energy 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.| Reach Subsea vs. BW Offshore | Reach Subsea vs. Eidesvik Offshore ASA | Reach Subsea vs. Solstad Offsho | Reach Subsea vs. Odfjell Drilling |
| Alternus Energy vs. Elkem ASA | Alternus Energy vs. Integrated Wind Solutions | Alternus Energy vs. Vow ASA | Alternus Energy vs. North Energy ASA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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