Correlation Between Alfa Financial and Linedata Services

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

Diversification Opportunities for Alfa Financial and Linedata Services

-0.27

Correlation Coefficient

Alfa Financial  Linedata Services

Very good diversification

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

Pair Corralation between Alfa Financial and Linedata Services

Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the Linedata Services. In addition to that, Alfa Financial is 1.64 times more volatile than Linedata Services SA. It trades about -0.05 of its total potential returns per unit of risk. Linedata Services SA is currently generating about 0.0 per unit of volatility. If you would invest  8,060  in Linedata Services SA on October 25, 2024 and sell it today you would lose (60.00) from holding Linedata Services SA or give up 0.74% of portfolio value over 90 days.

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

Alfa Financial Software  vs.  Linedata Services SA

Alfa Financial Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Financial Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Linedata Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linedata Services SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Linedata Services is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alfa Financial and Linedata Services

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

The idea behind Alfa Financial Software and Linedata Services SA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.