Correlation Between Alfa Financial and KINGBOARD CHEMICAL

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

Diversification Opportunities for Alfa Financial and KINGBOARD CHEMICAL

0.5

Correlation Coefficient

Alfa Financial  KINGBOARD CHEMICAL

Very weak diversification

The 3 months correlation between Alfa and KINGBOARD is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Alfa Financial i.e., Alfa Financial and KINGBOARD CHEMICAL go up and down completely randomly.

Pair Corralation between Alfa Financial and KINGBOARD CHEMICAL

Assuming the 90 days trading horizon Alfa Financial is expected to generate 5.73 times less return on investment than KINGBOARD CHEMICAL. But when comparing it to its historical volatility, Alfa Financial Software is 1.68 times less risky than KINGBOARD CHEMICAL. It trades about 0.03 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  232.00  in KINGBOARD CHEMICAL on December 31, 2024 and sell it today you would earn a total of  40.00  from holding KINGBOARD CHEMICAL or generate 17.24% return on investment over 90 days.

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

Alfa Financial Software  vs.  KINGBOARD CHEMICAL

Alfa Financial Software

Risk-Adjusted Performance

Insignificant

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.

KINGBOARD CHEMICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, KINGBOARD CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Financial and KINGBOARD CHEMICAL

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

The idea behind Alfa Financial Software and KINGBOARD CHEMICAL 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 Transaction History module to view history of all your transactions and understand their impact on performance.