Correlation Between Alphanam and Foreign Trade

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

By analyzing existing cross correlation between Alphanam ME and Foreign Trade Development, you can compare the effects of market volatilities on Alphanam and Foreign Trade 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 Alphanam with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Foreign Trade.

Diversification Opportunities for Alphanam and Foreign Trade

-0.65

Correlation Coefficient

Alphanam  Foreign Trade

Excellent diversification

The 3 months correlation between Alphanam and Foreign is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Foreign Trade Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Development and Alphanam 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 Alphanam ME are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Development has no effect on the direction of Alphanam i.e., Alphanam and Foreign Trade go up and down completely randomly.

Pair Corralation between Alphanam and Foreign Trade

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Foreign Trade. But the stock apears to be less risky and, when comparing its historical volatility, Alphanam ME is 1.44 times less risky than Foreign Trade. The stock trades about -0.09 of its potential returns per unit of risk. The Foreign Trade Development is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,600,000  in Foreign Trade Development on October 6, 2024 and sell it today you would earn a total of  90,000  from holding Foreign Trade Development or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.83%
Values	Daily Returns

Alphanam ME  vs.  Foreign Trade Development

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Foreign Trade Development

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Development are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Foreign Trade displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphanam and Foreign Trade

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

The idea behind Alphanam ME and Foreign Trade Development 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.