Correlation Between Alfa Financial and Air Products
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Air Products 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 Air Products 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 Air Products Chemicals, you can compare the effects of market volatilities on Alfa Financial and Air Products 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 Air Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Air Products.
Diversification Opportunities for Alfa Financial and Air Products
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alfa and Air is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Air Products Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products Chemicals 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products Chemicals has no effect on the direction of Alfa Financial i.e., Alfa Financial and Air Products go up and down completely randomly.
Pair Corralation between Alfa Financial and Air Products
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 2.24 times more return on investment than Air Products. However, Alfa Financial is 2.24 times more volatile than Air Products Chemicals. It trades about 0.05 of its potential returns per unit of risk. Air Products Chemicals is currently generating about 0.01 per unit of risk. If you would invest 22,100 in Alfa Financial Software on September 12, 2024 and sell it today you would earn a total of 450.00 from holding Alfa Financial Software or generate 2.04% 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. Air Products Chemicals
Performance |
| Timeline |
| Alfa Financial Software |
| Air Products Chemicals |
Alfa Financial and Air Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Air Products
The main advantage of trading using opposite Alfa Financial and Air Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Air Products 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 Air Products will offset losses from the drop in Air Products' long position.| Alfa Financial vs. X FAB Silicon Foundries | Alfa Financial vs. DXC Technology Co | Alfa Financial vs. Polar Capital Technology | Alfa Financial vs. Pfeiffer Vacuum Technology |
| Air Products vs. Hong Kong Land | Air Products vs. Neometals | Air Products vs. Coor Service Management | Air Products vs. Fidelity Sustainable USD |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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