Correlation Between ALFORMER Industrial and Trade Van

Can any of the company-specific risk be diversified away by investing in both ALFORMER Industrial and Trade Van 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 ALFORMER Industrial and Trade Van into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALFORMER Industrial Co and Trade Van Information Services, you can compare the effects of market volatilities on ALFORMER Industrial and Trade Van 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 ALFORMER Industrial with a short position of Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALFORMER Industrial and Trade Van.

Diversification Opportunities for ALFORMER Industrial and Trade Van

0.24

Correlation Coefficient

ALFORMER Industrial  Trade Van

Modest diversification

The 3 months correlation between ALFORMER and Trade is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial Co and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information and ALFORMER Industrial 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 ALFORMER Industrial Co are associated (or correlated) with Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of ALFORMER Industrial i.e., ALFORMER Industrial and Trade Van go up and down completely randomly.

Pair Corralation between ALFORMER Industrial and Trade Van

Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to generate 4.24 times more return on investment than Trade Van. However, ALFORMER Industrial is 4.24 times more volatile than Trade Van Information Services. It trades about 0.09 of its potential returns per unit of risk. Trade Van Information Services is currently generating about 0.21 per unit of risk. If you would invest  2,680  in ALFORMER Industrial Co on October 9, 2024 and sell it today you would earn a total of  535.00  from holding ALFORMER Industrial Co or generate 19.96% return on investment over 90 days.

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

ALFORMER Industrial Co  vs.  Trade Van Information Services

ALFORMER Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALFORMER Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ALFORMER Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Trade Van Information

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trade Van showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALFORMER Industrial and Trade Van

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

The idea behind ALFORMER Industrial Co and Trade Van Information Services 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.