Correlation Between Altimeter Growth and Caribbean Utilities

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

By analyzing existing cross correlation between Altimeter Growth 2 and Caribbean Utilities, you can compare the effects of market volatilities on Altimeter Growth and Caribbean Utilities 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 Altimeter Growth with a short position of Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altimeter Growth and Caribbean Utilities.

Diversification Opportunities for Altimeter Growth and Caribbean Utilities

-0.39

Correlation Coefficient

Altimeter Growth  Caribbean Utilities

Very good diversification

The 3 months correlation between Altimeter and Caribbean is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Altimeter Growth 2 and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities and Altimeter Growth 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 Altimeter Growth 2 are associated (or correlated) with Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of Altimeter Growth i.e., Altimeter Growth and Caribbean Utilities go up and down completely randomly.

Pair Corralation between Altimeter Growth and Caribbean Utilities

If you would invest  1,279  in Caribbean Utilities on January 30, 2024 and sell it today you would earn a total of  107.00  from holding Caribbean Utilities or generate 8.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Altimeter Growth 2  vs.  Caribbean Utilities

Altimeter Growth 2

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altimeter Growth 2 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Altimeter Growth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Caribbean Utilities

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caribbean Utilities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Caribbean Utilities reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altimeter Growth and Caribbean Utilities

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

The idea behind Altimeter Growth 2 and Caribbean Utilities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.