Correlation Between BankInvest Optima and Alefarm Brewing

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

By analyzing existing cross correlation between BankInvest Optima 30 and Alefarm Brewing AS, you can compare the effects of market volatilities on BankInvest Optima 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 BankInvest Optima with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Optima and Alefarm Brewing.

Diversification Opportunities for BankInvest Optima and Alefarm Brewing

-0.46

Correlation Coefficient

BankInvest Optima  Alefarm Brewing

Very good diversification

The 3 months correlation between BankInvest and Alefarm is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Optima 30 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 BankInvest Optima 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 BankInvest Optima 30 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 BankInvest Optima i.e., BankInvest Optima and Alefarm Brewing go up and down completely randomly.

Pair Corralation between BankInvest Optima and Alefarm Brewing

Assuming the 90 days trading horizon BankInvest Optima 30 is expected to under-perform the Alefarm Brewing. But the stock apears to be less risky and, when comparing its historical volatility, BankInvest Optima 30 is 10.6 times less risky than Alefarm Brewing. The stock trades about -0.17 of its potential returns per unit of risk. The Alefarm Brewing AS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Alefarm Brewing AS on December 26, 2024 and sell it today you would earn a total of  68.00  from holding Alefarm Brewing AS or generate 47.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

BankInvest Optima 30  vs.  Alefarm Brewing AS

BankInvest Optima

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Optima 30 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Alefarm Brewing AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alefarm Brewing AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Alefarm Brewing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BankInvest Optima and Alefarm Brewing

The main advantage of trading using opposite BankInvest Optima and Alefarm Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankInvest Optima 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 BankInvest Optima 30 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.