Correlation Between Alfa Financial and Ferrexpo PLC

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

By analyzing existing cross correlation between Alfa Financial Software and Ferrexpo PLC, you can compare the effects of market volatilities on Alfa Financial and Ferrexpo 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 Alfa Financial with a short position of Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and Ferrexpo PLC.

Diversification Opportunities for Alfa Financial and Ferrexpo PLC

-0.57

Correlation Coefficient

Alfa Financial  Ferrexpo PLC

Excellent diversification

The 3 months correlation between Alfa and Ferrexpo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Alfa Financial i.e., Alfa Financial and Ferrexpo PLC go up and down completely randomly.

Pair Corralation between Alfa Financial and Ferrexpo PLC

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.19 times more return on investment than Ferrexpo PLC. However, Alfa Financial Software is 5.34 times less risky than Ferrexpo PLC. It trades about 0.05 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about -0.08 per unit of risk. If you would invest  21,500  in Alfa Financial Software on December 24, 2024 and sell it today you would earn a total of  850.00  from holding Alfa Financial Software or generate 3.95% return on investment over 90 days.

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

Alfa Financial Software  vs.  Ferrexpo PLC

Alfa Financial Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ferrexpo PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ferrexpo PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alfa Financial and Ferrexpo PLC

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

The idea behind Alfa Financial Software and Ferrexpo 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.