Correlation Between Alfa Financial and Graphic Packaging

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

Diversification Opportunities for Alfa Financial and Graphic Packaging

0.27

Correlation Coefficient

Alfa Financial  Graphic Packaging

Modest diversification

The 3 months correlation between Alfa and Graphic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Alfa Financial i.e., Alfa Financial and Graphic Packaging go up and down completely randomly.

Pair Corralation between Alfa Financial and Graphic Packaging

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.4 times more return on investment than Graphic Packaging. However, Alfa Financial is 1.4 times more volatile than Graphic Packaging Holding. It trades about -0.15 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about -0.4 per unit of risk. If you would invest  260.00  in Alfa Financial Software on October 10, 2024 and sell it today you would lose (14.00) from holding Alfa Financial Software or give up 5.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Alfa Financial Software  vs.  Graphic Packaging Holding

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 fragile basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Graphic Packaging Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alfa Financial and Graphic Packaging

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

The idea behind Alfa Financial Software and Graphic Packaging Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.