Correlation Between Eguana Technologies and Alfen NV
Can any of the company-specific risk be diversified away by investing in both Eguana Technologies 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 Eguana Technologies and Alfen NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eguana Technologies and Alfen NV, you can compare the effects of market volatilities on Eguana Technologies 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 Eguana Technologies with a short position of Alfen NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eguana Technologies and Alfen NV.
Diversification Opportunities for Eguana Technologies and Alfen NV
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eguana and Alfen is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV and Eguana Technologies 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 Eguana Technologies 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 Eguana Technologies i.e., Eguana Technologies and Alfen NV go up and down completely randomly.
Pair Corralation between Eguana Technologies and Alfen NV
Assuming the 90 days horizon Eguana Technologies is expected to generate 4.43 times more return on investment than Alfen NV. However, Eguana Technologies is 4.43 times more volatile than Alfen NV. It trades about 0.01 of its potential returns per unit of risk. Alfen NV is currently generating about -0.12 per unit of risk. If you would invest 20.00 in Eguana Technologies on August 28, 2024 and sell it today you would lose (19.48) from holding Eguana Technologies or give up 97.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.26% |
| Values | Daily Returns |
Eguana Technologies vs. Alfen NV
Performance |
| Timeline |
| Eguana Technologies |
| Alfen NV |
Eguana Technologies and Alfen NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eguana Technologies and Alfen NV
The main advantage of trading using opposite Eguana Technologies and Alfen NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eguana Technologies 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.| Eguana Technologies vs. Element Solutions | Eguana Technologies vs. Orion Engineered Carbons | Eguana Technologies vs. Minerals Technologies | Eguana Technologies vs. Ingevity Corp |
| Alfen NV vs. Copa Holdings SA | Alfen NV vs. United Airlines Holdings | Alfen NV vs. Delta Air Lines | Alfen NV vs. SkyWest |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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