Correlation Between Alphanam and FIT INVEST

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

By analyzing existing cross correlation between Alphanam ME and FIT INVEST JSC, you can compare the effects of market volatilities on Alphanam and FIT INVEST 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 FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and FIT INVEST.

Diversification Opportunities for Alphanam and FIT INVEST

0.64

Correlation Coefficient

Alphanam  FIT INVEST

Poor diversification

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

Pair Corralation between Alphanam and FIT INVEST

Assuming the 90 days trading horizon Alphanam ME is expected to generate 3.31 times more return on investment than FIT INVEST. However, Alphanam is 3.31 times more volatile than FIT INVEST JSC. It trades about 0.22 of its potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.14 per unit of risk. If you would invest  480,000  in Alphanam ME on December 30, 2024 and sell it today you would earn a total of  150,000  from holding Alphanam ME or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.0%
Values	Daily Returns

Alphanam ME  vs.  FIT INVEST JSC

Alphanam ME

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphanam ME are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Alphanam displayed solid returns over the last few months and may actually be approaching a breakup point.

FIT INVEST JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FIT INVEST may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alphanam and FIT INVEST

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

The idea behind Alphanam ME and FIT INVEST JSC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.