Correlation Between Alto Ingredients and Surgical Care

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

By analyzing existing cross correlation between Alto Ingredients and Surgical Care Affiliates, you can compare the effects of market volatilities on Alto Ingredients and Surgical Care 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 Surgical Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alto Ingredients and Surgical Care.

Diversification Opportunities for Alto Ingredients and Surgical Care

0.0

Correlation Coefficient

Alto Ingredients  Surgical Care

Pay attention - limited upside

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

Pair Corralation between Alto Ingredients and Surgical Care

If you would invest  187.00  in Alto Ingredients on February 6, 2024 and sell it today you would earn a total of  3.00  from holding Alto Ingredients or generate 1.6% return on investment over 90 days.

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

Alto Ingredients  vs.  Surgical Care Affiliates

Alto Ingredients

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alto Ingredients are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alto Ingredients is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Surgical Care Affiliates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surgical Care Affiliates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Surgical Care is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alto Ingredients and Surgical Care

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

The idea behind Alto Ingredients and Surgical Care Affiliates 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.