Correlation Between Alexander Forbes and Afine Investments

Can any of the company-specific risk be diversified away by investing in both Alexander Forbes and Afine Investments 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 Alexander Forbes and Afine Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alexander Forbes Grp and Afine Investments, you can compare the effects of market volatilities on Alexander Forbes and Afine Investments 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 Alexander Forbes with a short position of Afine Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexander Forbes and Afine Investments.

Diversification Opportunities for Alexander Forbes and Afine Investments

0.16

Correlation Coefficient

Alexander Forbes  Afine Investments

Average diversification

The 3 months correlation between Alexander and Afine is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alexander Forbes Grp and Afine Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afine Investments and Alexander Forbes 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 Alexander Forbes Grp are associated (or correlated) with Afine Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afine Investments has no effect on the direction of Alexander Forbes i.e., Alexander Forbes and Afine Investments go up and down completely randomly.

Pair Corralation between Alexander Forbes and Afine Investments

Assuming the 90 days trading horizon Alexander Forbes Grp is expected to generate 0.7 times more return on investment than Afine Investments. However, Alexander Forbes Grp is 1.43 times less risky than Afine Investments. It trades about 0.2 of its potential returns per unit of risk. Afine Investments is currently generating about 0.08 per unit of risk. If you would invest  74,000  in Alexander Forbes Grp on September 24, 2024 and sell it today you would earn a total of  9,000  from holding Alexander Forbes Grp or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Alexander Forbes Grp  vs.  Afine Investments

Alexander Forbes Grp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Forbes Grp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alexander Forbes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Afine Investments

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Alexander Forbes and Afine Investments

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

The idea behind Alexander Forbes Grp and Afine Investments 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.