Correlation Between Alfa Financial and TRAVEL +

Can any of the company-specific risk be diversified away by investing in both Alfa Financial and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on Alfa Financial and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and TRAVEL +.

Diversification Opportunities for Alfa Financial and TRAVEL +

0.82

Correlation Coefficient

Alfa Financial  TRAVEL +

Very poor diversification

The 3 months correlation between Alfa and TRAVEL is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of Alfa Financial i.e., Alfa Financial and TRAVEL + go up and down completely randomly.

Pair Corralation between Alfa Financial and TRAVEL +

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.14 times more return on investment than TRAVEL +. However, Alfa Financial is 1.14 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.04 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.05 per unit of risk. If you would invest  175.00  in Alfa Financial Software on October 4, 2024 and sell it today you would earn a total of  73.00  from holding Alfa Financial Software or generate 41.71% return on investment over 90 days.

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

Alfa Financial Software  vs.  TRAVEL LEISURE DL 01

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 uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TRAVEL LEISURE DL

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TRAVEL LEISURE DL 01 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TRAVEL + reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Financial and TRAVEL +

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

The idea behind Alfa Financial Software and TRAVEL LEISURE DL 01 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.