Correlation Between Delta Air and Alfa Financial

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

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

Diversification Opportunities for Delta Air and Alfa Financial

-0.33

Correlation Coefficient

Delta Air  Alfa Financial

Very good diversification

The 3 months correlation between Delta and Alfa is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines 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 Delta Air 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 Delta Air Lines 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 Delta Air i.e., Delta Air and Alfa Financial go up and down completely randomly.

Pair Corralation between Delta Air and Alfa Financial

Assuming the 90 days horizon Delta Air Lines is expected to under-perform the Alfa Financial. In addition to that, Delta Air is 1.81 times more volatile than Alfa Financial Software. It trades about -0.14 of its total potential returns per unit of risk. Alfa Financial Software is currently generating about 0.29 per unit of volatility. If you would invest  260.00  in Alfa Financial Software on December 5, 2024 and sell it today you would earn a total of  22.00  from holding Alfa Financial Software or generate 8.46% return on investment over 90 days.

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

Delta Air Lines  vs.  Alfa Financial Software

Delta Air Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Air Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Alfa Financial Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alfa Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Delta Air and Alfa Financial

The main advantage of trading using opposite Delta Air and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air 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 Delta Air Lines 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.