Correlation Between Aluflexpack and Adval Tech

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

By analyzing existing cross correlation between Aluflexpack AG and Adval Tech Holding, you can compare the effects of market volatilities on Aluflexpack and Adval Tech 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 Aluflexpack with a short position of Adval Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluflexpack and Adval Tech.

Diversification Opportunities for Aluflexpack and Adval Tech

-0.14

Correlation Coefficient

Aluflexpack  Adval Tech

Good diversification

The 3 months correlation between Aluflexpack and Adval is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Aluflexpack AG and Adval Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adval Tech Holding and Aluflexpack 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 Aluflexpack AG are associated (or correlated) with Adval Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adval Tech Holding has no effect on the direction of Aluflexpack i.e., Aluflexpack and Adval Tech go up and down completely randomly.

Pair Corralation between Aluflexpack and Adval Tech

Assuming the 90 days trading horizon Aluflexpack AG is expected to generate 1.41 times more return on investment than Adval Tech. However, Aluflexpack is 1.41 times more volatile than Adval Tech Holding. It trades about 0.06 of its potential returns per unit of risk. Adval Tech Holding is currently generating about -0.05 per unit of risk. If you would invest  910.00  in Aluflexpack AG on October 8, 2024 and sell it today you would earn a total of  540.00  from holding Aluflexpack AG or generate 59.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.53%
Values	Daily Returns

Aluflexpack AG  vs.  Adval Tech Holding

Aluflexpack AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluflexpack AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aluflexpack is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Adval Tech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adval Tech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Adval Tech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aluflexpack and Adval Tech

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

The idea behind Aluflexpack AG and Adval Tech Holding 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.