Correlation Between Alfa Holdings and GoPro
Can any of the company-specific risk be diversified away by investing in both Alfa Holdings and GoPro 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 Holdings and GoPro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alfa Holdings SA and GoPro Inc, you can compare the effects of market volatilities on Alfa Holdings and GoPro 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 Holdings with a short position of GoPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Holdings and GoPro.
Diversification Opportunities for Alfa Holdings and GoPro
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alfa and GoPro is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and GoPro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoPro Inc and Alfa Holdings 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 Holdings SA are associated (or correlated) with GoPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoPro Inc has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and GoPro go up and down completely randomly.
Pair Corralation between Alfa Holdings and GoPro
Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the GoPro. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Holdings SA is 1.33 times less risky than GoPro. The stock trades about -0.19 of its potential returns per unit of risk. The GoPro Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 695.00 in GoPro Inc on August 30, 2024 and sell it today you would earn a total of 33.00 from holding GoPro Inc or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alfa Holdings SA vs. GoPro Inc
Performance |
| Timeline |
| Alfa Holdings SA |
| GoPro Inc |
Alfa Holdings and GoPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alfa Holdings and GoPro
The main advantage of trading using opposite Alfa Holdings and GoPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Holdings position performs unexpectedly, GoPro 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 GoPro will offset losses from the drop in GoPro's long position.| Alfa Holdings vs. Alfa Holdings SA | Alfa Holdings vs. Alfa Holdings SA | Alfa Holdings vs. Banco Alfa de | Alfa Holdings vs. Financeira Alfa SA |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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