Correlation Between ALCAT and Streamwide

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

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

Diversification Opportunities for ALCAT and Streamwide

0.27

Correlation Coefficient

ALCAT  Streamwide

Modest diversification

The 3 months correlation between ALCAT and Streamwide is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ALCAT and Streamwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Streamwide and ALCAT 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 ALCAT are associated (or correlated) with Streamwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Streamwide has no effect on the direction of ALCAT i.e., ALCAT and Streamwide go up and down completely randomly.

Pair Corralation between ALCAT and Streamwide

Assuming the 90 days trading horizon ALCAT is expected to generate 10.53 times less return on investment than Streamwide. But when comparing it to its historical volatility, ALCAT is 1.55 times less risky than Streamwide. It trades about 0.03 of its potential returns per unit of risk. Streamwide is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,620  in Streamwide on April 24, 2025 and sell it today you would earn a total of  2,560  from holding Streamwide or generate 70.72% return on investment over 90 days.

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

ALCAT  vs.  Streamwide

ALCAT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALCAT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, ALCAT is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Streamwide

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Streamwide are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Streamwide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALCAT and Streamwide

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

The idea behind ALCAT and Streamwide 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.