Correlation Between Alfa Financial and Moonpig Group

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

Diversification Opportunities for Alfa Financial and Moonpig Group

0.64

Correlation Coefficient

Alfa Financial  Moonpig Group

Poor diversification

The 3 months correlation between Alfa and Moonpig is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Moonpig Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonpig Group 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 Moonpig Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonpig Group PLC has no effect on the direction of Alfa Financial i.e., Alfa Financial and Moonpig Group go up and down completely randomly.

Pair Corralation between Alfa Financial and Moonpig Group

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.74 times more return on investment than Moonpig Group. However, Alfa Financial Software is 1.35 times less risky than Moonpig Group. It trades about -0.06 of its potential returns per unit of risk. Moonpig Group PLC is currently generating about -0.08 per unit of risk. If you would invest  21,650  in Alfa Financial Software on October 26, 2024 and sell it today you would lose (1,600) from holding Alfa Financial Software or give up 7.39% of portfolio value over 90 days.

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

Alfa Financial Software  vs.  Moonpig Group PLC

Alfa Financial Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Financial Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Moonpig Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moonpig Group 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 February 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 Moonpig Group

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

The idea behind Alfa Financial Software and Moonpig Group 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.