Correlation Between Vienna Insurance and Alfa Financial

Can any of the company-specific risk be diversified away by investing in both Vienna Insurance 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 Vienna Insurance and Alfa Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vienna Insurance Group and Alfa Financial Software, you can compare the effects of market volatilities on Vienna Insurance 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 Vienna Insurance with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vienna Insurance and Alfa Financial.

Diversification Opportunities for Vienna Insurance and Alfa Financial

-0.78

Correlation Coefficient

Vienna Insurance  Alfa Financial

Pay attention - limited upside

The 3 months correlation between Vienna and Alfa is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vienna Insurance 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 Vienna Insurance 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 Vienna Insurance 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 Vienna Insurance i.e., Vienna Insurance and Alfa Financial go up and down completely randomly.

Pair Corralation between Vienna Insurance and Alfa Financial

Assuming the 90 days trading horizon Vienna Insurance is expected to generate 1.13 times less return on investment than Alfa Financial. But when comparing it to its historical volatility, Vienna Insurance Group is 2.43 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 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,870  in Alfa Financial Software on October 26, 2024 and sell it today you would earn a total of  4,380  from holding Alfa Financial Software or generate 27.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vienna Insurance Group  vs.  Alfa Financial Software

Vienna Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vienna Insurance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Alfa Financial Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Financial Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vienna Insurance and Alfa Financial

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

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.