Correlation Between CAP LEASE and Alfa Financial

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

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

Diversification Opportunities for CAP LEASE and Alfa Financial

-0.34

Correlation Coefficient

CAP LEASE  Alfa Financial

Very good diversification

The 3 months correlation between CAP and Alfa is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION 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 CAP LEASE 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 CAP LEASE AVIATION 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 CAP LEASE i.e., CAP LEASE and Alfa Financial go up and down completely randomly.

Pair Corralation between CAP LEASE and Alfa Financial

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the Alfa Financial. But the stock apears to be less risky and, when comparing its historical volatility, CAP LEASE AVIATION is 1.21 times less risky than Alfa Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Alfa Financial Software is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  20,000  in Alfa Financial Software on October 22, 2024 and sell it today you would earn a total of  200.00  from holding Alfa Financial Software or generate 1.0% return on investment over 90 days.

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

CAP LEASE AVIATION  vs.  Alfa Financial Software

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alfa Financial Software

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CAP LEASE and Alfa Financial

The main advantage of trading using opposite CAP LEASE and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE 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 CAP LEASE AVIATION 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.