Correlation Between Alfa Holdings and EBay

Can any of the company-specific risk be diversified away by investing in both Alfa Holdings and EBay 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 EBay 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 eBay Inc, you can compare the effects of market volatilities on Alfa Holdings and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Holdings and EBay.

Diversification Opportunities for Alfa Holdings and EBay

-0.31

Correlation Coefficient

Alfa Holdings  EBay

Very good diversification

The 3 months correlation between Alfa and EBay is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and EBay go up and down completely randomly.

Pair Corralation between Alfa Holdings and EBay

Assuming the 90 days trading horizon Alfa Holdings is expected to generate 12.29 times less return on investment than EBay. In addition to that, Alfa Holdings is 1.22 times more volatile than eBay Inc. It trades about 0.0 of its total potential returns per unit of risk. eBay Inc is currently generating about 0.06 per unit of volatility. If you would invest  11,563  in eBay Inc on October 5, 2024 and sell it today you would earn a total of  7,673  from holding eBay Inc or generate 66.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Alfa Holdings SA  vs.  eBay Inc

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.

eBay Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBay may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alfa Holdings and EBay

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

The idea behind Alfa Holdings SA and eBay Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.