Correlation Between Keysight Technologies and Alfa Financial

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

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

Diversification Opportunities for Keysight Technologies and Alfa Financial

0.1

Correlation Coefficient

Keysight Technologies  Alfa Financial

Average diversification

The 3 months correlation between Keysight and Alfa is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Keysight Technologies 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 Keysight Technologies 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 Keysight Technologies 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 Keysight Technologies i.e., Keysight Technologies and Alfa Financial go up and down completely randomly.

Pair Corralation between Keysight Technologies and Alfa Financial

Assuming the 90 days horizon Keysight Technologies is expected to generate 0.94 times more return on investment than Alfa Financial. However, Keysight Technologies is 1.07 times less risky than Alfa Financial. It trades about 0.27 of its potential returns per unit of risk. Alfa Financial Software is currently generating about -0.32 per unit of risk. If you would invest  15,572  in Keysight Technologies on October 24, 2024 and sell it today you would earn a total of  890.00  from holding Keysight Technologies or generate 5.72% return on investment over 90 days.

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

Keysight Technologies  vs.  Alfa Financial Software

Keysight Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Keysight Technologies and Alfa Financial

The main advantage of trading using opposite Keysight Technologies and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Keysight Technologies 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 Keysight Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.