Correlation Between Exxon Mobil and Alfa Holdings

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

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

Diversification Opportunities for Exxon Mobil and Alfa Holdings

-0.35

Correlation Coefficient

Exxon Mobil  Alfa Holdings

Very good diversification

The 3 months correlation between Exxon and Alfa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and Exxon Mobil 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 Exxon Mobil are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Exxon Mobil i.e., Exxon Mobil and Alfa Holdings go up and down completely randomly.

Pair Corralation between Exxon Mobil and Alfa Holdings

Assuming the 90 days trading horizon Exxon Mobil is expected to generate 0.36 times more return on investment than Alfa Holdings. However, Exxon Mobil is 2.79 times less risky than Alfa Holdings. It trades about 0.1 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.03 per unit of risk. If you would invest  7,740  in Exxon Mobil on September 14, 2024 and sell it today you would earn a total of  687.00  from holding Exxon Mobil or generate 8.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Exxon Mobil  vs.  Alfa Holdings SA

Exxon Mobil

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Exxon Mobil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alfa Holdings SA

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Exxon Mobil and Alfa Holdings

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

The idea behind Exxon Mobil and Alfa Holdings SA 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.