Correlation Between Alefarm Brewing and Formuepleje Mix

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

By analyzing existing cross correlation between Alefarm Brewing AS and Formuepleje Mix Medium, you can compare the effects of market volatilities on Alefarm Brewing and Formuepleje Mix 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 Alefarm Brewing with a short position of Formuepleje Mix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alefarm Brewing and Formuepleje Mix.

Diversification Opportunities for Alefarm Brewing and Formuepleje Mix

-0.51

Correlation Coefficient

Alefarm Brewing  Formuepleje Mix

Excellent diversification

The 3 months correlation between Alefarm and Formuepleje is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS and Formuepleje Mix Medium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formuepleje Mix Medium and Alefarm Brewing 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 Alefarm Brewing AS are associated (or correlated) with Formuepleje Mix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formuepleje Mix Medium has no effect on the direction of Alefarm Brewing i.e., Alefarm Brewing and Formuepleje Mix go up and down completely randomly.

Pair Corralation between Alefarm Brewing and Formuepleje Mix

Assuming the 90 days trading horizon Alefarm Brewing AS is expected to generate 10.98 times more return on investment than Formuepleje Mix. However, Alefarm Brewing is 10.98 times more volatile than Formuepleje Mix Medium. It trades about 0.12 of its potential returns per unit of risk. Formuepleje Mix Medium is currently generating about -0.07 per unit of risk. If you would invest  142.00  in Alefarm Brewing AS on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Alefarm Brewing AS or generate 40.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.32%
Values	Daily Returns

Alefarm Brewing AS  vs.  Formuepleje Mix Medium

Alefarm Brewing AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alefarm Brewing AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Alefarm Brewing sustained solid returns over the last few months and may actually be approaching a breakup point.

Formuepleje Mix Medium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Formuepleje Mix Medium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alefarm Brewing and Formuepleje Mix

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

The idea behind Alefarm Brewing AS and Formuepleje Mix Medium 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.