Correlation Between ALEFARM BREWING and STORE ELECTRONIC

Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on ALEFARM BREWING and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and STORE ELECTRONIC.

Diversification Opportunities for ALEFARM BREWING and STORE ELECTRONIC

-0.52

Correlation Coefficient

ALEFARM BREWING  STORE ELECTRONIC

Excellent diversification

The 3 months correlation between ALEFARM and STORE is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and STORE ELECTRONIC go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and STORE ELECTRONIC

Assuming the 90 days horizon ALEFARM BREWING is expected to generate 22.11 times less return on investment than STORE ELECTRONIC. But when comparing it to its historical volatility, ALEFARM BREWING DK 05 is 1.06 times less risky than STORE ELECTRONIC. It trades about 0.02 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  13,510  in STORE ELECTRONIC on October 15, 2024 and sell it today you would earn a total of  3,670  from holding STORE ELECTRONIC or generate 27.17% return on investment over 90 days.

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

ALEFARM BREWING DK 05  vs.  STORE ELECTRONIC

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

STORE ELECTRONIC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALEFARM BREWING and STORE ELECTRONIC

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

The idea behind ALEFARM BREWING DK 05 and STORE ELECTRONIC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.