Correlation Between Alfa Holdings and Banco Da

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

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

Diversification Opportunities for Alfa Holdings and Banco Da

0.74

Correlation Coefficient

Alfa Holdings  Banco Da

Poor diversification

The 3 months correlation between Alfa and Banco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and Banco da Amaznia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco da Amaznia and Alfa Holdings 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 Alfa Holdings SA are associated (or correlated) with Banco Da. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco da Amaznia has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and Banco Da go up and down completely randomly.

Pair Corralation between Alfa Holdings and Banco Da

Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the Banco Da. In addition to that, Alfa Holdings is 3.35 times more volatile than Banco da Amaznia. It trades about -0.21 of its total potential returns per unit of risk. Banco da Amaznia is currently generating about -0.13 per unit of volatility. If you would invest  9,166  in Banco da Amaznia on October 7, 2024 and sell it today you would lose (705.00) from holding Banco da Amaznia or give up 7.69% of portfolio value over 90 days.

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

Alfa Holdings SA  vs.  Banco da Amaznia

Alfa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Banco da Amaznia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco da Amaznia 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 Alfa Holdings and Banco Da

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

The idea behind Alfa Holdings SA and Banco da Amaznia 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.