Correlation Between Alto Ingredients and Ecolab

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

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

Diversification Opportunities for Alto Ingredients and Ecolab

0.47

Correlation Coefficient

Alto Ingredients  Ecolab

Very weak diversification

The 3 months correlation between Alto and Ecolab is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alto Ingredients and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc and Alto Ingredients 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 Alto Ingredients are associated (or correlated) with Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Alto Ingredients i.e., Alto Ingredients and Ecolab go up and down completely randomly.

Pair Corralation between Alto Ingredients and Ecolab

Given the investment horizon of 90 days Alto Ingredients is expected to generate 3.49 times more return on investment than Ecolab. However, Alto Ingredients is 3.49 times more volatile than Ecolab Inc. It trades about 0.11 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.12 per unit of risk. If you would invest  86.00  in Alto Ingredients on May 18, 2025 and sell it today you would earn a total of  20.00  from holding Alto Ingredients or generate 23.26% return on investment over 90 days.

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

Alto Ingredients  vs.  Ecolab Inc

Alto Ingredients

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Alto Ingredients are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alto Ingredients displayed solid returns over the last few months and may actually be approaching a breakup point.

Ecolab Inc

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ecolab Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Ecolab may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Alto Ingredients and Ecolab

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

The idea behind Alto Ingredients and Ecolab Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.