Correlation Between Alfa Financial and Eclectic Bar
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Eclectic Bar 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 Eclectic Bar 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 Eclectic Bar Group, you can compare the effects of market volatilities on Alfa Financial and Eclectic Bar 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 Eclectic Bar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Eclectic Bar.
Diversification Opportunities for Alfa Financial and Eclectic Bar
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alfa and Eclectic is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Alfa Financial i.e., Alfa Financial and Eclectic Bar go up and down completely randomly.
Pair Corralation between Alfa Financial and Eclectic Bar
Assuming the 90 days trading horizon Alfa Financial is expected to generate 2.49 times less return on investment than Eclectic Bar. But when comparing it to its historical volatility, Alfa Financial Software is 2.11 times less risky than Eclectic Bar. It trades about 0.03 of its potential returns per unit of risk. Eclectic Bar Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Eclectic Bar Group on October 12, 2024 and sell it today you would earn a total of 2,050 from holding Eclectic Bar Group or generate 77.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Eclectic Bar Group
Performance |
| Timeline |
| Alfa Financial Software |
| Eclectic Bar Group |
Alfa Financial and Eclectic Bar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Eclectic Bar
The main advantage of trading using opposite Alfa Financial and Eclectic Bar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Eclectic Bar 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 Eclectic Bar will offset losses from the drop in Eclectic Bar's long position.| Alfa Financial vs. Bell Food Group | Alfa Financial vs. Host Hotels Resorts | Alfa Financial vs. Associated British Foods | Alfa Financial vs. PPHE Hotel Group |
| Eclectic Bar vs. Aberdeen Diversified Income | Eclectic Bar vs. Sunny Optical Technology | Eclectic Bar vs. Seraphim Space Investment | Eclectic Bar vs. Alfa Financial Software |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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