Correlation Between Alpcot Holding and Freemelt Holding

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

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

Diversification Opportunities for Alpcot Holding and Freemelt Holding

0.46

Correlation Coefficient

Alpcot Holding  Freemelt Holding

Very weak diversification

The 3 months correlation between Alpcot and Freemelt is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Alpcot Holding AB and Freemelt Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freemelt Holding and Alpcot Holding 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 Alpcot Holding AB are associated (or correlated) with Freemelt Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freemelt Holding has no effect on the direction of Alpcot Holding i.e., Alpcot Holding and Freemelt Holding go up and down completely randomly.

Pair Corralation between Alpcot Holding and Freemelt Holding

Assuming the 90 days trading horizon Alpcot Holding AB is expected to generate 0.82 times more return on investment than Freemelt Holding. However, Alpcot Holding AB is 1.21 times less risky than Freemelt Holding. It trades about -0.02 of its potential returns per unit of risk. Freemelt Holding AB is currently generating about -0.04 per unit of risk. If you would invest  170.00  in Alpcot Holding AB on September 26, 2024 and sell it today you would lose (110.00) from holding Alpcot Holding AB or give up 64.71% of portfolio value over 90 days.

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

Alpcot Holding AB  vs.  Freemelt Holding AB

Alpcot Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Freemelt Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freemelt Holding AB 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alpcot Holding and Freemelt Holding

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

The idea behind Alpcot Holding AB and Freemelt Holding AB 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.