Correlation Between Esfera Robotics and ALM Classic

Can any of the company-specific risk be diversified away by investing in both Esfera Robotics and ALM Classic 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 Esfera Robotics and ALM Classic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Esfera Robotics R and ALM Classic RA, you can compare the effects of market volatilities on Esfera Robotics and ALM Classic 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 Esfera Robotics with a short position of ALM Classic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esfera Robotics and ALM Classic.

Diversification Opportunities for Esfera Robotics and ALM Classic

0.88

Correlation Coefficient

Esfera Robotics  ALM Classic

Very poor diversification

The 3 months correlation between Esfera and ALM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Esfera Robotics R and ALM Classic RA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Classic RA and Esfera Robotics 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 Esfera Robotics R are associated (or correlated) with ALM Classic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Classic RA has no effect on the direction of Esfera Robotics i.e., Esfera Robotics and ALM Classic go up and down completely randomly.

Pair Corralation between Esfera Robotics and ALM Classic

Assuming the 90 days trading horizon Esfera Robotics R is expected to under-perform the ALM Classic. In addition to that, Esfera Robotics is 4.87 times more volatile than ALM Classic RA. It trades about -0.08 of its total potential returns per unit of risk. ALM Classic RA is currently generating about -0.04 per unit of volatility. If you would invest  37,992  in ALM Classic RA on December 26, 2024 and sell it today you would lose (221.00) from holding ALM Classic RA or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Esfera Robotics R  vs.  ALM Classic RA

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Esfera Robotics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ALM Classic RA

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALM Classic RA has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, ALM Classic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Esfera Robotics and ALM Classic

The main advantage of trading using opposite Esfera Robotics and ALM Classic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esfera Robotics position performs unexpectedly, ALM Classic 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 ALM Classic will offset losses from the drop in ALM Classic's long position.

The idea behind Esfera Robotics R and ALM Classic RA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.