Correlation Between WE Source and Alto Ingredients

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

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

Diversification Opportunities for WE Source and Alto Ingredients

0.0

Correlation Coefficient

WE Source  Alto Ingredients

Pay attention - limited upside

The 3 months correlation between WESC and Alto is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WE Source Corp and Alto Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alto Ingredients and WE Source 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 WE Source Corp are associated (or correlated) with Alto Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alto Ingredients has no effect on the direction of WE Source i.e., WE Source and Alto Ingredients go up and down completely randomly.

Pair Corralation between WE Source and Alto Ingredients

If you would invest  87.00  in Alto Ingredients on May 15, 2025 and sell it today you would earn a total of  14.00  from holding Alto Ingredients or generate 16.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

WE Source Corp  vs.  Alto Ingredients

WE Source Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days WE Source Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WE Source is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Alto Ingredients

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Alto Ingredients are ranked lower than 6 (%) 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.

Pair Trading with WE Source and Alto Ingredients

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

The idea behind WE Source Corp and Alto Ingredients 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.