Correlation Between Alfa Financial and LOral SA
Can any of the company-specific risk be diversified away by investing in both Alfa Financial and LOral SA 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 LOral SA 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 LOral SA, you can compare the effects of market volatilities on Alfa Financial and LOral SA 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 LOral SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and LOral SA.
Diversification Opportunities for Alfa Financial and LOral SA
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alfa and LOral is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA 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 LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Alfa Financial i.e., Alfa Financial and LOral SA go up and down completely randomly.
Pair Corralation between Alfa Financial and LOral SA
Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the LOral SA. In addition to that, Alfa Financial is 1.74 times more volatile than LOral SA. It trades about -0.21 of its total potential returns per unit of risk. LOral SA is currently generating about -0.21 per unit of volatility. If you would invest 34,345 in LOral SA on October 11, 2024 and sell it today you would lose (1,385) from holding LOral SA or give up 4.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Alfa Financial Software vs. LOral SA
Performance |
Timeline |
Alfa Financial Software |
LOral SA |
Alfa Financial and LOral SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alfa Financial and LOral SA
The main advantage of trading using opposite Alfa Financial and LOral SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial position performs unexpectedly, LOral SA 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 LOral SA will offset losses from the drop in LOral SA's long position.Alfa Financial vs. Summit Hotel Properties | Alfa Financial vs. Beta Systems Software | Alfa Financial vs. MHP Hotel AG | Alfa Financial vs. COVIVIO HOTELS INH |
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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 Stocks Directory module to find actively traded stocks across global markets.
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