Correlation Between Alfa Financial and Auction Technology

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Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Auction Technology 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 Auction Technology 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 Auction Technology Group, you can compare the effects of market volatilities on Alfa Financial and Auction Technology 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 Auction Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Auction Technology.

Diversification Opportunities for Alfa Financial and Auction Technology

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Alfa and Auction is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Auction Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auction Technology 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 Auction Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auction Technology has no effect on the direction of Alfa Financial i.e., Alfa Financial and Auction Technology go up and down completely randomly.

Pair Corralation between Alfa Financial and Auction Technology

Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the Auction Technology. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Financial Software is 2.07 times less risky than Auction Technology. The stock trades about -0.14 of its potential returns per unit of risk. The Auction Technology Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  42,850  in Auction Technology Group on October 22, 2024 and sell it today you would earn a total of  15,150  from holding Auction Technology Group or generate 35.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.56%
ValuesDaily Returns

Alfa Financial Software  vs.  Auction Technology Group

 Performance 
       Timeline  
Alfa Financial Software 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Auction Technology 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alfa Financial and Auction Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alfa Financial and Auction Technology

The main advantage of trading using opposite Alfa Financial and Auction Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Auction Technology 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 Auction Technology will offset losses from the drop in Auction Technology's long position.
The idea behind Alfa Financial Software and Auction Technology Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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