Correlation Between Alfa Financial and AXA SA
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and AXA SA 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 AXA SA 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 AXA SA, you can compare the effects of market volatilities on Alfa Financial and AXA SA 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 AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and AXA SA.
Diversification Opportunities for Alfa Financial and AXA SA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alfa and AXA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of Alfa Financial i.e., Alfa Financial and AXA SA go up and down completely randomly.
Pair Corralation between Alfa Financial and AXA SA
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.8 times more return on investment than AXA SA. However, Alfa Financial is 1.8 times more volatile than AXA SA. It trades about 0.05 of its potential returns per unit of risk. AXA SA is currently generating about 0.06 per unit of risk. If you would invest 166.00 in Alfa Financial Software on September 4, 2024 and sell it today you would earn a total of 92.00 from holding Alfa Financial Software or generate 55.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. AXA SA
Performance |
| Timeline |
| Alfa Financial Software |
| AXA SA |
Alfa Financial and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and AXA SA
The main advantage of trading using opposite Alfa Financial and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, AXA SA 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 AXA SA will offset losses from the drop in AXA SA's long position.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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