Correlation Between Take-Two Interactive and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Take-Two Interactive 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 Take-Two Interactive and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and Alfa Financial Software, you can compare the effects of market volatilities on Take-Two Interactive 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 Take-Two Interactive with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take-Two Interactive and Alfa Financial.
Diversification Opportunities for Take-Two Interactive and Alfa Financial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Take-Two and Alfa is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software 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 Take-Two Interactive 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 Take Two Interactive Software 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 Take-Two Interactive i.e., Take-Two Interactive and Alfa Financial go up and down completely randomly.
Pair Corralation between Take-Two Interactive and Alfa Financial
Assuming the 90 days horizon Take Two Interactive Software is expected to generate 0.84 times more return on investment than Alfa Financial. However, Take Two Interactive Software is 1.19 times less risky than Alfa Financial. It trades about 0.07 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.05 per unit of risk. If you would invest 9,812 in Take Two Interactive Software on August 27, 2024 and sell it today you would earn a total of 8,288 from holding Take Two Interactive Software or generate 84.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. Alfa Financial Software
Performance |
| Timeline |
| Take Two Interactive |
| Alfa Financial Software |
Take-Two Interactive and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take-Two Interactive and Alfa Financial
The main advantage of trading using opposite Take-Two Interactive and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take-Two Interactive 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.| Take-Two Interactive vs. Sea Limited | Take-Two Interactive vs. NEXON Co | Take-Two Interactive vs. Bilibili |
| Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc | Alfa Financial vs. Apple Inc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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