Correlation Between Alfa Financial and Keysight Technologies

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

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

Diversification Opportunities for Alfa Financial and Keysight Technologies

0.33

Correlation Coefficient

Alfa Financial  Keysight Technologies

Weak diversification

The 3 months correlation between Alfa and Keysight is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of Alfa Financial i.e., Alfa Financial and Keysight Technologies go up and down completely randomly.

Pair Corralation between Alfa Financial and Keysight Technologies

Assuming the 90 days trading horizon Alfa Financial is expected to generate 5.2 times less return on investment than Keysight Technologies. In addition to that, Alfa Financial is 1.08 times more volatile than Keysight Technologies. It trades about 0.01 of its total potential returns per unit of risk. Keysight Technologies is currently generating about 0.06 per unit of volatility. If you would invest  15,338  in Keysight Technologies on October 9, 2024 and sell it today you would earn a total of  592.00  from holding Keysight Technologies or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.37%
Values	Daily Returns

Alfa Financial Software  vs.  Keysight Technologies

Alfa Financial Software

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Keysight Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keysight Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alfa Financial and Keysight Technologies

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

The idea behind Alfa Financial Software and Keysight Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.