Correlation Between ALD SA and FUYO GENERAL

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

By analyzing existing cross correlation between ALD SA and FUYO GENERAL LEASE, you can compare the effects of market volatilities on ALD SA and FUYO GENERAL 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 ALD SA with a short position of FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALD SA and FUYO GENERAL.

Diversification Opportunities for ALD SA and FUYO GENERAL

-0.7

Correlation Coefficient

ALD SA  FUYO GENERAL

Excellent diversification

The 3 months correlation between ALD and FUYO is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding ALD SA and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE and ALD 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 ALD SA are associated (or correlated) with FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of ALD SA i.e., ALD SA and FUYO GENERAL go up and down completely randomly.

Pair Corralation between ALD SA and FUYO GENERAL

Assuming the 90 days horizon ALD SA is expected to generate 1.46 times more return on investment than FUYO GENERAL. However, ALD SA is 1.46 times more volatile than FUYO GENERAL LEASE. It trades about 0.15 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about -0.11 per unit of risk. If you would invest  821.00  in ALD SA on April 25, 2025 and sell it today you would earn a total of  115.00  from holding ALD SA or generate 14.01% return on investment over 90 days.

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

ALD SA  vs.  FUYO GENERAL LEASE

ALD SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALD SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ALD SA reported solid returns over the last few months and may actually be approaching a breakup point.

FUYO GENERAL LEASE

Risk-Adjusted Performance

Very Weak

Over the last 90 days FUYO GENERAL LEASE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ALD SA and FUYO GENERAL

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

The idea behind ALD SA and FUYO GENERAL LEASE 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.