Correlation Between Take Two and Alfa Financial

Can any of the company-specific risk be diversified away by investing in both Take Two 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 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 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 with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and Alfa Financial.

Diversification Opportunities for Take Two and Alfa Financial

0.78

Correlation Coefficient

Take Two  Alfa Financial

Poor diversification

The 3 months correlation between Take and Alfa is 0.78. 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 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 i.e., Take Two and Alfa Financial go up and down completely randomly.

Pair Corralation between Take Two and Alfa Financial

Assuming the 90 days trading horizon Take Two Interactive Software is expected to under-perform the Alfa Financial. But the stock apears to be less risky and, when comparing its historical volatility, Take Two Interactive Software is 1.72 times less risky than Alfa Financial. The stock trades about -0.08 of its potential returns per unit of risk. The Alfa Financial Software is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  21,800  in Alfa Financial Software on September 23, 2024 and sell it today you would lose (250.00) from holding Alfa Financial Software or give up 1.15% of portfolio value 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

Take Two Interactive

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alfa Financial Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Take Two and Alfa Financial

The main advantage of trading using opposite Take Two and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two 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.

The idea behind Take Two Interactive Software and Alfa Financial Software 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.

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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.