Correlation Between Alfa Financial and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and Polar Capital 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 Polar Capital 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 Polar Capital Technology, you can compare the effects of market volatilities on Alfa Financial and Polar Capital 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 Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Polar Capital.
Diversification Opportunities for Alfa Financial and Polar Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alfa and Polar is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital 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 Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Alfa Financial i.e., Alfa Financial and Polar Capital go up and down completely randomly.
Pair Corralation between Alfa Financial and Polar Capital
Assuming the 90 days trading horizon Alfa Financial is expected to generate 4.12 times less return on investment than Polar Capital. In addition to that, Alfa Financial is 1.51 times more volatile than Polar Capital Technology. It trades about 0.04 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.23 per unit of volatility. If you would invest 31,840 in Polar Capital Technology on August 26, 2024 and sell it today you would earn a total of 2,610 from holding Polar Capital Technology or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Financial Software vs. Polar Capital Technology
Performance |
| Timeline |
| Alfa Financial Software |
| Polar Capital Technology |
Alfa Financial and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Financial and Polar Capital
The main advantage of trading using opposite Alfa Financial and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, Polar Capital 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 Polar Capital will offset losses from the drop in Polar Capital's long position.| Alfa Financial vs. Capital Drilling | Alfa Financial vs. Livermore Investments Group | Alfa Financial vs. Odfjell Drilling | Alfa Financial vs. BE Semiconductor Industries |
| Polar Capital vs. Catalyst Media Group | Polar Capital vs. Oncimmune Holdings plc | Polar Capital vs. Invesco Health Care | Polar Capital vs. Coor Service Management |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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