Correlation Between Beta Systems and Alfa Financial

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

By analyzing existing cross correlation between Beta Systems Software and Alfa Financial Software, you can compare the effects of market volatilities on Beta Systems and Alfa Financial 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 Beta Systems with a short position of Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta Systems and Alfa Financial.

Diversification Opportunities for Beta Systems and Alfa Financial

-0.33

Correlation Coefficient

Beta Systems  Alfa Financial

Very good diversification

The 3 months correlation between Beta and Alfa is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Beta Systems Software and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and Beta Systems 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 Beta Systems Software are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Beta Systems i.e., Beta Systems and Alfa Financial go up and down completely randomly.

Pair Corralation between Beta Systems and Alfa Financial

Assuming the 90 days horizon Beta Systems Software is expected to generate 1.37 times more return on investment than Alfa Financial. However, Beta Systems is 1.37 times more volatile than Alfa Financial Software. It trades about -0.02 of its potential returns per unit of risk. Alfa Financial Software is currently generating about -0.39 per unit of risk. If you would invest  2,500  in Beta Systems Software on October 26, 2024 and sell it today you would lose (20.00) from holding Beta Systems Software or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Beta Systems Software  vs.  Alfa Financial Software

Beta Systems Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beta Systems Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Beta Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alfa Financial Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Financial Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Beta Systems and Alfa Financial

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

The idea behind Beta Systems Software and Alfa Financial Software 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.