Correlation Between Alfa Financial and Hershey
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Alfa Financial and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Hershey.
Diversification Opportunities for Alfa Financial and Hershey
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alfa and Hershey is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Alfa Financial i.e., Alfa Financial and Hershey go up and down completely randomly.
Pair Corralation between Alfa Financial and Hershey
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.09 times more return on investment than Hershey. However, Alfa Financial is 1.09 times more volatile than Hershey Co. It trades about 0.12 of its potential returns per unit of risk. Hershey Co is currently generating about -0.34 per unit of risk. If you would invest 21,550 in Alfa Financial Software on November 6, 2024 and sell it today you would earn a total of 800.00 from holding Alfa Financial Software or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Hershey Co
Performance |
| Timeline |
| Alfa Financial Software |
| Hershey |
Alfa Financial and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Hershey
The main advantage of trading using opposite Alfa Financial and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Alfa Financial vs. Iron Mountain | Alfa Financial vs. Compal Electronics GDR | Alfa Financial vs. Bigblu Broadband PLC | Alfa Financial vs. Aptitude Software Group |
| Hershey vs. Coor Service Management | Hershey vs. SBM Offshore NV | Hershey vs. Allianz Technology Trust | Hershey vs. Polar Capital Technology |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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