Correlation Between Astar and Alfen NV
Can any of the company-specific risk be diversified away by investing in both Astar and Alfen NV 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 Astar and Alfen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Alfen NV, you can compare the effects of market volatilities on Astar and Alfen NV 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 Astar with a short position of Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Alfen NV.
Diversification Opportunities for Astar and Alfen NV
Excellent diversification
The 3 months correlation between Astar and Alfen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV and Astar 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 Astar are associated (or correlated) with Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of Astar i.e., Astar and Alfen NV go up and down completely randomly.
Pair Corralation between Astar and Alfen NV
Assuming the 90 days trading horizon Astar is expected to generate 1.99 times more return on investment than Alfen NV. However, Astar is 1.99 times more volatile than Alfen NV. It trades about 0.04 of its potential returns per unit of risk. Alfen NV is currently generating about -0.06 per unit of risk. If you would invest 4.75 in Astar on October 12, 2024 and sell it today you would earn a total of 1.43 from holding Astar or generate 30.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 59.48% |
| Values | Daily Returns |
Astar vs. Alfen NV
Performance |
| Timeline |
| Astar |
| Alfen NV |
Astar and Alfen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Alfen NV
The main advantage of trading using opposite Astar and Alfen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Alfen NV 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 Alfen NV will offset losses from the drop in Alfen NV's long position.The idea behind Astar and Alfen NV 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.| Alfen NV vs. Carnegie Clean Energy | Alfen NV vs. ALERION CLEANPOWER | Alfen NV vs. Broadcom | Alfen NV vs. Clean Energy Fuels |
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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