Correlation Between Alstom SA and ATAI Life

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Can any of the company-specific risk be diversified away by investing in both Alstom SA and ATAI Life 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 Alstom SA and ATAI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alstom SA and ATAI Life Sciences, you can compare the effects of market volatilities on Alstom SA and ATAI Life 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 Alstom SA with a short position of ATAI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstom SA and ATAI Life.

Diversification Opportunities for Alstom SA and ATAI Life

0.12
  Correlation Coefficient

Average diversification

The 24 months correlation between Alstom and ATAI Life is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alstom SA and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences and Alstom SA 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 Alstom SA are associated (or correlated) with ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Alstom SA i.e., Alstom SA and ATAI Life go up and down completely randomly.

Pair Corralation between Alstom SA and ATAI Life

Assuming the 90 days horizon Alstom SA is expected to generate 0.76 times more return on investment than ATAI Life. However, Alstom SA is 1.32 times less risky than ATAI Life. It trades about 0.11 of its potential returns per unit of risk. ATAI Life Sciences is currently generating about -0.03 per unit of risk. If you would invest  2,013  in Alstom SA on September 4, 2022 and sell it today you would earn a total of  497.00  from holding Alstom SA or generate 24.69% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Alstom SA  vs.  ATAI Life Sciences

 Performance (%) 
       Timeline  
Alstom SA 
Alstom Performance
0 of 100
Over the last 90 days Alstom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest sluggish performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alstom Price Channel

ATAI Life Sciences 
ATAI Life Performance
0 of 100
Over the last 90 days ATAI Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ATAI Life Price Channel

Alstom SA and ATAI Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alstom SA and ATAI Life

The main advantage of trading using opposite Alstom SA and ATAI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstom SA position performs unexpectedly, ATAI Life 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 ATAI Life will offset losses from the drop in ATAI Life's long position.
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The idea behind Alstom SA and ATAI Life Sciences 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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Check out your portfolio center. 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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