Correlation Between Alfa Financial and CHINA SHENHUA
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and CHINA SHENHUA 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 CHINA SHENHUA 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 CHINA SHENHUA ENA, you can compare the effects of market volatilities on Alfa Financial and CHINA SHENHUA 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 CHINA SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and CHINA SHENHUA.
Diversification Opportunities for Alfa Financial and CHINA SHENHUA
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alfa and CHINA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA 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 CHINA SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of Alfa Financial i.e., Alfa Financial and CHINA SHENHUA go up and down completely randomly.
Pair Corralation between Alfa Financial and CHINA SHENHUA
Assuming the 90 days trading horizon Alfa Financial is expected to generate 1.21 times less return on investment than CHINA SHENHUA. In addition to that, Alfa Financial is 1.25 times more volatile than CHINA SHENHUA ENA. It trades about 0.16 of its total potential returns per unit of risk. CHINA SHENHUA ENA is currently generating about 0.24 per unit of volatility. If you would invest 1,520 in CHINA SHENHUA ENA on September 13, 2024 and sell it today you would earn a total of 160.00 from holding CHINA SHENHUA ENA or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alfa Financial Software vs. CHINA SHENHUA ENA
Performance |
| Timeline |
| Alfa Financial Software |
| CHINA SHENHUA ENA |
Alfa Financial and CHINA SHENHUA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and CHINA SHENHUA
The main advantage of trading using opposite Alfa Financial and CHINA SHENHUA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, CHINA SHENHUA 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 CHINA SHENHUA will offset losses from the drop in CHINA SHENHUA's long position.| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
| CHINA SHENHUA vs. Spirent Communications plc | CHINA SHENHUA vs. ASURE SOFTWARE | CHINA SHENHUA vs. Alfa Financial Software | CHINA SHENHUA vs. UPDATE SOFTWARE |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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