Correlation Between PF Atlantic and Alefarm Brewing

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

By analyzing existing cross correlation between PF Atlantic Petroleum and Alefarm Brewing AS, you can compare the effects of market volatilities on PF Atlantic and Alefarm Brewing 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 PF Atlantic with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of PF Atlantic and Alefarm Brewing.

Diversification Opportunities for PF Atlantic and Alefarm Brewing

0.8

Correlation Coefficient

PF Atlantic  Alefarm Brewing

Very poor diversification

The 3 months correlation between ATLA-DKK and Alefarm is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PF Atlantic Petroleum and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS and PF Atlantic 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 PF Atlantic Petroleum are associated (or correlated) with Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of PF Atlantic i.e., PF Atlantic and Alefarm Brewing go up and down completely randomly.

Pair Corralation between PF Atlantic and Alefarm Brewing

Assuming the 90 days trading horizon PF Atlantic Petroleum is expected to under-perform the Alefarm Brewing. In addition to that, PF Atlantic is 1.19 times more volatile than Alefarm Brewing AS. It trades about -0.13 of its total potential returns per unit of risk. Alefarm Brewing AS is currently generating about -0.07 per unit of volatility. If you would invest  158.00  in Alefarm Brewing AS on October 6, 2024 and sell it today you would lose (27.00) from holding Alefarm Brewing AS or give up 17.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

PF Atlantic Petroleum  vs.  Alefarm Brewing AS

PF Atlantic Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PF Atlantic Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alefarm Brewing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alefarm Brewing AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PF Atlantic and Alefarm Brewing

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

The idea behind PF Atlantic Petroleum and Alefarm Brewing AS 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.