Correlation Between Alfa Financial and JIAHUA STORES

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

Diversification Opportunities for Alfa Financial and JIAHUA STORES

0.0

Correlation Coefficient

Alfa Financial  JIAHUA STORES

Pay attention - limited upside

The 3 months correlation between Alfa and JIAHUA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and JIAHUA STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JIAHUA STORES 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 JIAHUA STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JIAHUA STORES has no effect on the direction of Alfa Financial i.e., Alfa Financial and JIAHUA STORES go up and down completely randomly.

Pair Corralation between Alfa Financial and JIAHUA STORES

If you would invest  1.90  in JIAHUA STORES on October 8, 2024 and sell it today you would earn a total of  0.00  from holding JIAHUA STORES or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Alfa Financial Software  vs.  JIAHUA STORES

Alfa Financial Software

Risk-Adjusted Performance

6 of 100

Modest

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

JIAHUA STORES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alfa Financial and JIAHUA STORES

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

The idea behind Alfa Financial Software and JIAHUA STORES 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.