Correlation Between Alfa Financial and CHAODA MODERN

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

Diversification Opportunities for Alfa Financial and CHAODA MODERN

0.27

Correlation Coefficient

Alfa Financial  CHAODA MODERN

Modest diversification

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

Pair Corralation between Alfa Financial and CHAODA MODERN

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.52 times more return on investment than CHAODA MODERN. However, Alfa Financial Software is 1.91 times less risky than CHAODA MODERN. It trades about 0.06 of its potential returns per unit of risk. CHAODA MODERN AGRI is currently generating about -0.56 per unit of risk. If you would invest  268.00  in Alfa Financial Software on December 10, 2024 and sell it today you would earn a total of  4.00  from holding Alfa Financial Software or generate 1.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	28.57%
Values	Daily Returns

Alfa Financial Software  vs.  CHAODA MODERN AGRI

Alfa Financial Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CHAODA MODERN AGRI

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAODA MODERN AGRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CHAODA MODERN is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alfa Financial and CHAODA MODERN

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

The idea behind Alfa Financial Software and CHAODA MODERN AGRI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.