Correlation Between Altamir SCA and Wendel

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

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

Diversification Opportunities for Altamir SCA and Wendel

0.43

Correlation Coefficient

Altamir SCA  Wendel

Very weak diversification

The 3 months correlation between Altamir and Wendel is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Altamir SCA and Wendel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wendel and Altamir SCA 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 Altamir SCA are associated (or correlated) with Wendel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wendel has no effect on the direction of Altamir SCA i.e., Altamir SCA and Wendel go up and down completely randomly.

Pair Corralation between Altamir SCA and Wendel

Assuming the 90 days trading horizon Altamir SCA is expected to generate 1.34 times more return on investment than Wendel. However, Altamir SCA is 1.34 times more volatile than Wendel. It trades about 0.23 of its potential returns per unit of risk. Wendel is currently generating about 0.01 per unit of risk. If you would invest  2,450  in Altamir SCA on January 28, 2024 and sell it today you would earn a total of  130.00  from holding Altamir SCA or generate 5.31% return on investment over 90 days.

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

Altamir SCA  vs.  Wendel

Altamir SCA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altamir SCA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Altamir SCA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wendel

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wendel are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wendel may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Altamir SCA and Wendel

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

The idea behind Altamir SCA and Wendel 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.