Correlation Between Air France-KLM and Altisource Asset

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

Diversification Opportunities for Air France-KLM and Altisource Asset

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Air and Altisource is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Air France-KLM SA and Altisource Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altisource Asset Man and Air France-KLM 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 Air France KLM SA are associated (or correlated) with Altisource Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altisource Asset Man has no effect on the direction of Air France-KLM i.e., Air France-KLM and Altisource Asset go up and down completely randomly.

Pair Corralation between Air France-KLM and Altisource Asset

Assuming the 90 days horizon Air France KLM SA is expected to generate 32.98 times more return on investment than Altisource Asset. However, Air France-KLM is 32.98 times more volatile than Altisource Asset Management. It trades about 0.33 of its potential returns per unit of risk. Altisource Asset Management is currently generating about 0.03 per unit of risk. If you would invest  461.00  in Air France KLM SA on December 30, 2023 and sell it today you would earn a total of  629.00  from holding Air France KLM SA or generate 136.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Air France-KLM SA  vs.  Altisource Asset Management

 Performance 
       Timeline  
Air France-KLM SA 

Risk-Adjusted Performance

0 of 100

 
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High
Very Weak
Over the last 90 days Air France KLM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Altisource Asset Man 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Altisource Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Air France-KLM and Altisource Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Air France-KLM and Altisource Asset

The main advantage of trading using opposite Air France-KLM and Altisource Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France-KLM position performs unexpectedly, Altisource Asset 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 Altisource Asset will offset losses from the drop in Altisource Asset's long position.
The idea behind Air France KLM SA and Altisource Asset Management 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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