Correlation Between Waga Energy and Alstom SA
Can any of the company-specific risk be diversified away by investing in both Waga Energy and Alstom 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 Waga Energy and Alstom SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waga Energy SA and Alstom SA, you can compare the effects of market volatilities on Waga Energy and Alstom 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 Waga Energy with a short position of Alstom SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waga Energy and Alstom SA.
Diversification Opportunities for Waga Energy and Alstom SA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waga and Alstom is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Waga Energy SA and Alstom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alstom SA and Waga Energy 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 Waga Energy SA are associated (or correlated) with Alstom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alstom SA has no effect on the direction of Waga Energy i.e., Waga Energy and Alstom SA go up and down completely randomly.
Pair Corralation between Waga Energy and Alstom SA
Assuming the 90 days trading horizon Waga Energy SA is expected to under-perform the Alstom SA. But the stock apears to be less risky and, when comparing its historical volatility, Waga Energy SA is 1.47 times less risky than Alstom SA. The stock trades about -0.19 of its potential returns per unit of risk. The Alstom SA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,911 in Alstom SA on November 29, 2024 and sell it today you would earn a total of 180.00 from holding Alstom SA or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waga Energy SA vs. Alstom SA
Performance |
| Timeline |
| Waga Energy SA |
| Alstom SA |
Waga Energy and Alstom SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waga Energy and Alstom SA
The main advantage of trading using opposite Waga Energy and Alstom SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waga Energy position performs unexpectedly, Alstom 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 Alstom SA will offset losses from the drop in Alstom SA's long position.| Waga Energy vs. OVH Groupe SAS | Waga Energy vs. Hydrogene De France | Waga Energy vs. Neoen SA | Waga Energy vs. Haffner Energy SA |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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