Correlation Between Alfen NV and Ilika Plc

Can any of the company-specific risk be diversified away by investing in both Alfen NV and Ilika Plc 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 Alfen NV and Ilika Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfen NV and Ilika plc, you can compare the effects of market volatilities on Alfen NV and Ilika Plc 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 Alfen NV with a short position of Ilika Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and Ilika Plc.

Diversification Opportunities for Alfen NV and Ilika Plc

0.0

Correlation Coefficient

Alfen NV  Ilika Plc

Pay attention - limited upside

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

Pair Corralation between Alfen NV and Ilika Plc

If you would invest  27.00  in Ilika plc on December 25, 2024 and sell it today you would earn a total of  21.00  from holding Ilika plc or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Alfen NV  vs.  Ilika plc

Alfen NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Alfen NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ilika plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ilika plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Ilika Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfen NV and Ilika Plc

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

The idea behind Alfen NV and Ilika plc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.