Correlation Between Alfa Financial and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on Alfa Financial and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Eastman Chemical.
Diversification Opportunities for Alfa Financial and Eastman Chemical
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alfa and Eastman is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Alfa Financial i.e., Alfa Financial and Eastman Chemical go up and down completely randomly.
Pair Corralation between Alfa Financial and Eastman Chemical
Assuming the 90 days trading horizon Alfa Financial is expected to generate 2.0 times less return on investment than Eastman Chemical. In addition to that, Alfa Financial is 1.24 times more volatile than Eastman Chemical. It trades about 0.04 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.1 per unit of volatility. If you would invest 9,700 in Eastman Chemical on August 30, 2024 and sell it today you would earn a total of 370.00 from holding Eastman Chemical or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alfa Financial Software vs. Eastman Chemical
Performance |
| Timeline |
| Alfa Financial Software |
| Eastman Chemical |
Alfa Financial and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Eastman Chemical
The main advantage of trading using opposite Alfa Financial and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Alfa Financial vs. MOVIE GAMES SA | Alfa Financial vs. Haverty Furniture Companies | Alfa Financial vs. American Homes 4 | Alfa Financial vs. INVITATION HOMES DL |
| Eastman Chemical vs. COPLAND ROAD CAPITAL | Eastman Chemical vs. Transport International Holdings | Eastman Chemical vs. Liberty Broadband | Eastman Chemical vs. GRIFFIN MINING LTD |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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