Correlation Between Alfa Financial and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and SYSTEMAIR 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 Alfa Financial and SYSTEMAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Financial Software and SYSTEMAIR AB, you can compare the effects of market volatilities on Alfa Financial and SYSTEMAIR 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 Alfa Financial with a short position of SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and SYSTEMAIR.
Diversification Opportunities for Alfa Financial and SYSTEMAIR
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alfa and SYSTEMAIR is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Alfa Financial i.e., Alfa Financial and SYSTEMAIR go up and down completely randomly.
Pair Corralation between Alfa Financial and SYSTEMAIR
Assuming the 90 days trading horizon Alfa Financial is expected to generate 5.81 times less return on investment than SYSTEMAIR. In addition to that, Alfa Financial is 1.26 times more volatile than SYSTEMAIR AB. It trades about 0.04 of its total potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.31 per unit of volatility. If you would invest 696.00 in SYSTEMAIR AB on September 2, 2024 and sell it today you would earn a total of 86.00 from holding SYSTEMAIR AB or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. SYSTEMAIR AB
Performance |
| Timeline |
| Alfa Financial Software |
| SYSTEMAIR AB |
Alfa Financial and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and SYSTEMAIR
The main advantage of trading using opposite Alfa Financial and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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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