Correlation Between Alexander Forbes and Famous Brands

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

Diversification Opportunities for Alexander Forbes and Famous Brands

-0.17

Correlation Coefficient

Alexander Forbes  Famous Brands

Good diversification

The 3 months correlation between Alexander and Famous is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alexander Forbes Grp and Famous Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Famous Brands 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 Famous Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Famous Brands has no effect on the direction of Alexander Forbes i.e., Alexander Forbes and Famous Brands go up and down completely randomly.

Pair Corralation between Alexander Forbes and Famous Brands

Assuming the 90 days trading horizon Alexander Forbes Grp is expected to generate 1.45 times more return on investment than Famous Brands. However, Alexander Forbes is 1.45 times more volatile than Famous Brands. It trades about 0.0 of its potential returns per unit of risk. Famous Brands is currently generating about -0.14 per unit of risk. If you would invest  79,500  in Alexander Forbes Grp on December 29, 2024 and sell it today you would lose (1,000.00) from holding Alexander Forbes Grp or give up 1.26% of portfolio value over 90 days.

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

Alexander Forbes Grp  vs.  Famous Brands

Alexander Forbes Grp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alexander Forbes Grp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Alexander Forbes is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Famous Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Famous Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alexander Forbes and Famous Brands

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

The idea behind Alexander Forbes Grp and Famous Brands 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.