Correlation Between Alfa Financial and CVW CLEANTECH
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and CVW CLEANTECH 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 CVW CLEANTECH 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 CVW CLEANTECH INC, you can compare the effects of market volatilities on Alfa Financial and CVW CLEANTECH 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 CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and CVW CLEANTECH.
Diversification Opportunities for Alfa Financial and CVW CLEANTECH
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alfa and CVW is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC 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 CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of Alfa Financial i.e., Alfa Financial and CVW CLEANTECH go up and down completely randomly.
Pair Corralation between Alfa Financial and CVW CLEANTECH
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.38 times more return on investment than CVW CLEANTECH. However, Alfa Financial Software is 2.66 times less risky than CVW CLEANTECH. It trades about 0.15 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about -0.06 per unit of risk. If you would invest 258.00 in Alfa Financial Software on December 8, 2024 and sell it today you would earn a total of 12.00 from holding Alfa Financial Software or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. CVW CLEANTECH INC
Performance |
| Timeline |
| Alfa Financial Software |
| CVW CLEANTECH INC |
Alfa Financial and CVW CLEANTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and CVW CLEANTECH
The main advantage of trading using opposite Alfa Financial and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, CVW CLEANTECH 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 CVW CLEANTECH will offset losses from the drop in CVW CLEANTECH's long position.| Alfa Financial vs. The Hongkong and | ||
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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