Correlation Between ALEFARM BREWING and H M

Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and H M 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 ALEFARM BREWING and H M into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALEFARM BREWING DK 05 and H M Hennes, you can compare the effects of market volatilities on ALEFARM BREWING and H M 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 ALEFARM BREWING with a short position of H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and H M.

Diversification Opportunities for ALEFARM BREWING and H M

-0.31

Correlation Coefficient

ALEFARM BREWING  H M

Very good diversification

The 3 months correlation between ALEFARM and HMSB is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and H M go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and H M

Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to generate 1.99 times more return on investment than H M. However, ALEFARM BREWING is 1.99 times more volatile than H M Hennes. It trades about 0.16 of its potential returns per unit of risk. H M Hennes is currently generating about -0.03 per unit of risk. If you would invest  16.00  in ALEFARM BREWING DK 05 on December 23, 2024 and sell it today you would earn a total of  6.00  from holding ALEFARM BREWING DK 05 or generate 37.5% return on investment over 90 days.

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

ALEFARM BREWING DK 05  vs.  H M Hennes

ALEFARM BREWING DK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALEFARM BREWING DK 05 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALEFARM BREWING reported solid returns over the last few months and may actually be approaching a breakup point.

H M Hennes

Risk-Adjusted Performance

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H M is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALEFARM BREWING and H M

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

The idea behind ALEFARM BREWING DK 05 and H M Hennes 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.