Correlation Between Alpha Services and Mytilineos

Can any of the company-specific risk be diversified away by investing in both Alpha Services and Mytilineos 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 Alpha Services and Mytilineos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Services and and Mytilineos SA, you can compare the effects of market volatilities on Alpha Services and Mytilineos 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 Alpha Services with a short position of Mytilineos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Services and Mytilineos.

Diversification Opportunities for Alpha Services and Mytilineos

0.23

Correlation Coefficient

Alpha Services  Mytilineos

Modest diversification

The 3 months correlation between Alpha and Mytilineos is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Services and and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Alpha Services 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 Alpha Services and are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Alpha Services i.e., Alpha Services and Mytilineos go up and down completely randomly.

Pair Corralation between Alpha Services and Mytilineos

Assuming the 90 days trading horizon Alpha Services is expected to generate 1.43 times less return on investment than Mytilineos. In addition to that, Alpha Services is 1.38 times more volatile than Mytilineos SA. It trades about 0.06 of its total potential returns per unit of risk. Mytilineos SA is currently generating about 0.12 per unit of volatility. If you would invest  1,495  in Mytilineos SA on February 11, 2024 and sell it today you would earn a total of  2,407  from holding Mytilineos SA or generate 161.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alpha Services and  vs.  Mytilineos SA

Alpha Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Services and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alpha Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mytilineos SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mytilineos SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Mytilineos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpha Services and Mytilineos

The main advantage of trading using opposite Alpha Services and Mytilineos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Services position performs unexpectedly, Mytilineos 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 Mytilineos will offset losses from the drop in Mytilineos' long position.

The idea behind Alpha Services and and Mytilineos SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.