Correlation Between Alfa Financial and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Alfa Financial and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Flow Traders.
Diversification Opportunities for Alfa Financial and Flow Traders
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alfa and Flow is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Alfa Financial i.e., Alfa Financial and Flow Traders go up and down completely randomly.
Pair Corralation between Alfa Financial and Flow Traders
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.06 times more return on investment than Flow Traders. However, Alfa Financial is 1.06 times more volatile than Flow Traders NV. It trades about 0.24 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.19 per unit of risk. If you would invest 20,900 in Alfa Financial Software on November 9, 2024 and sell it today you would earn a total of 1,700 from holding Alfa Financial Software or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Flow Traders NV
Performance |
| Timeline |
| Alfa Financial Software |
| Flow Traders NV |
Alfa Financial and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Flow Traders
The main advantage of trading using opposite Alfa Financial and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Alfa Financial vs. Silver Bullet Data | Alfa Financial vs. iShares Physical Silver | Alfa Financial vs. GoldMining | Alfa Financial vs. Costco Wholesale Corp |
| Flow Traders vs. Zegona Communications Plc | Flow Traders vs. Fortuna Silver Mines | Flow Traders vs. Verizon Communications | Flow Traders vs. Charter Communications Cl |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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