Correlation Between Vitec Software and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Vitec Software and Alfa Financial 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 Vitec Software and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitec Software Group and Alfa Financial Software, you can compare the effects of market volatilities on Vitec Software and Alfa Financial 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 Vitec Software with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitec Software and Alfa Financial.
Diversification Opportunities for Vitec Software and Alfa Financial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vitec and Alfa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vitec Software Group and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and Vitec Software 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 Vitec Software Group are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Vitec Software i.e., Vitec Software and Alfa Financial go up and down completely randomly.
Pair Corralation between Vitec Software and Alfa Financial
Assuming the 90 days trading horizon Vitec Software is expected to generate 1.9 times less return on investment than Alfa Financial. In addition to that, Vitec Software is 1.15 times more volatile than Alfa Financial Software. It trades about 0.05 of its total potential returns per unit of risk. Alfa Financial Software is currently generating about 0.11 per unit of volatility. If you would invest 18,984 in Alfa Financial Software on November 28, 2024 and sell it today you would earn a total of 5,016 from holding Alfa Financial Software or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vitec Software Group vs. Alfa Financial Software
Performance |
| Timeline |
| Vitec Software Group |
| Alfa Financial Software |
Vitec Software and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vitec Software and Alfa Financial
The main advantage of trading using opposite Vitec Software and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitec Software position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Vitec Software vs. Infineon Technologies AG | Vitec Software vs. Ashtead Technology Holdings | Vitec Software vs. MoneysupermarketCom Group PLC | Vitec Software vs. Sartorius Stedim Biotech |
| Alfa Financial vs. EJF Investments | Alfa Financial vs. Fresenius Medical Care | Alfa Financial vs. Target Healthcare REIT | Alfa Financial vs. Omega Healthcare Investors |
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 the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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