Correlation Between Alfa Financial and Airbus SE
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on Alfa Financial and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Airbus SE.
Diversification Opportunities for Alfa Financial and Airbus SE
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alfa and Airbus is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Alfa Financial i.e., Alfa Financial and Airbus SE go up and down completely randomly.
Pair Corralation between Alfa Financial and Airbus SE
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.09 times more return on investment than Airbus SE. However, Alfa Financial is 1.09 times more volatile than Airbus SE. It trades about 0.06 of its potential returns per unit of risk. Airbus SE is currently generating about 0.04 per unit of risk. If you would invest 161.00 in Alfa Financial Software on October 16, 2024 and sell it today you would earn a total of 71.00 from holding Alfa Financial Software or generate 44.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Airbus SE
Performance |
| Timeline |
| Alfa Financial Software |
| Airbus SE |
Alfa Financial and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Airbus SE
The main advantage of trading using opposite Alfa Financial and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| Alfa Financial vs. Iridium Communications | Alfa Financial vs. ecotel communication ag | Alfa Financial vs. Cairo Communication SpA | Alfa Financial vs. Chengdu PUTIAN Telecommunications |
| Airbus SE vs. GALENA MINING LTD | Airbus SE vs. Align Technology | Airbus SE vs. Alfa Financial Software | Airbus SE vs. MAGNUM MINING EXP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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