Correlation Between Marvell Technology and Alfa Holdings

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

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

Diversification Opportunities for Marvell Technology and Alfa Holdings

0.55

Correlation Coefficient

Marvell Technology  Alfa Holdings

Very weak diversification

The 3 months correlation between Marvell and Alfa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology 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 Marvell Technology 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 Marvell Technology 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 Marvell Technology i.e., Marvell Technology and Alfa Holdings go up and down completely randomly.

Pair Corralation between Marvell Technology and Alfa Holdings

Assuming the 90 days trading horizon Marvell Technology is expected to generate 1.01 times less return on investment than Alfa Holdings. But when comparing it to its historical volatility, Marvell Technology is 2.95 times less risky than Alfa Holdings. It trades about 0.15 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Alfa Holdings SA on October 23, 2024 and sell it today you would earn a total of  16.00  from holding Alfa Holdings SA or generate 2.29% return on investment over 90 days.

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

Marvell Technology  vs.  Alfa Holdings SA

Marvell Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

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 weak basic indicators, Alfa Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marvell Technology and Alfa Holdings

The main advantage of trading using opposite Marvell Technology and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marvell Technology 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 Marvell Technology 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.