Correlation Between Alpha Trust and Interlife General

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

By analyzing existing cross correlation between Alpha Trust Andromeda and Interlife General Insurance, you can compare the effects of market volatilities on Alpha Trust and Interlife General 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 Alpha Trust with a short position of Interlife General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Trust and Interlife General.

Diversification Opportunities for Alpha Trust and Interlife General

0.69

Correlation Coefficient

Alpha Trust  Interlife General

Poor diversification

The 3 months correlation between Alpha and Interlife is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Trust Andromeda and Interlife General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlife General and Alpha Trust 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 Alpha Trust Andromeda are associated (or correlated) with Interlife General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlife General has no effect on the direction of Alpha Trust i.e., Alpha Trust and Interlife General go up and down completely randomly.

Pair Corralation between Alpha Trust and Interlife General

Assuming the 90 days trading horizon Alpha Trust is expected to generate 1.13 times less return on investment than Interlife General. But when comparing it to its historical volatility, Alpha Trust Andromeda is 2.21 times less risky than Interlife General. It trades about 0.13 of its potential returns per unit of risk. Interlife General Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  470.00  in Interlife General Insurance on December 29, 2024 and sell it today you would earn a total of  27.00  from holding Interlife General Insurance or generate 5.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Alpha Trust Andromeda  vs.  Interlife General Insurance

Alpha Trust Andromeda

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Interlife General

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Interlife General Insurance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Interlife General may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alpha Trust and Interlife General

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

The idea behind Alpha Trust Andromeda and Interlife General Insurance 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.