Correlation Between Alfa Financial and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Alfa Financial and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Caledonia Mining.
Diversification Opportunities for Alfa Financial and Caledonia Mining
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alfa and Caledonia is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Alfa Financial i.e., Alfa Financial and Caledonia Mining go up and down completely randomly.
Pair Corralation between Alfa Financial and Caledonia Mining
Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.98 times more return on investment than Caledonia Mining. However, Alfa Financial Software is 1.02 times less risky than Caledonia Mining. It trades about -0.02 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.32 per unit of risk. If you would invest 21,800 in Alfa Financial Software on September 23, 2024 and sell it today you would lose (250.00) from holding Alfa Financial Software or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Caledonia Mining
Performance |
| Timeline |
| Alfa Financial Software |
| Caledonia Mining |
Alfa Financial and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Caledonia Mining
The main advantage of trading using opposite Alfa Financial and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Alfa Financial vs. mobilezone holding AG | Alfa Financial vs. MTI Wireless Edge | Alfa Financial vs. Verizon Communications | Alfa Financial vs. Spirent Communications plc |
| Caledonia Mining vs. Check Point Software | Caledonia Mining vs. Zinc Media Group | Caledonia Mining vs. Alfa Financial Software | Caledonia Mining vs. LBG Media PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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