Correlation Between Auction Technology and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Alfa Financial 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 Auction Technology and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Alfa Financial Software, you can compare the effects of market volatilities on Auction Technology and Alfa Financial 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 Auction Technology with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Alfa Financial.
Diversification Opportunities for Auction Technology and Alfa Financial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auction and Alfa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and Auction Technology 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 Auction Technology Group are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Auction Technology i.e., Auction Technology and Alfa Financial go up and down completely randomly.
Pair Corralation between Auction Technology and Alfa Financial
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 1.35 times more return on investment than Alfa Financial. However, Auction Technology is 1.35 times more volatile than Alfa Financial Software. It trades about 0.24 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.09 per unit of risk. If you would invest 55,400 in Auction Technology Group on November 3, 2024 and sell it today you would earn a total of 6,400 from holding Auction Technology Group or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auction Technology Group vs. Alfa Financial Software
Performance |
| Timeline |
| Auction Technology |
| Alfa Financial Software |
Auction Technology and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Alfa Financial
The main advantage of trading using opposite Auction Technology and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Auction Technology vs. Games Workshop Group | Auction Technology vs. Fulcrum Metals PLC | Auction Technology vs. Hochschild Mining plc | Auction Technology vs. CleanTech Lithium plc |
| Alfa Financial vs. Check Point Software | Alfa Financial vs. Europa Metals | Alfa Financial vs. National Beverage Corp | Alfa Financial vs. CNH Industrial NV |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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