Correlation Between Alfa Holdings and UBS Group

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

Diversification Opportunities for Alfa Holdings and UBS Group

-0.74

Correlation Coefficient

Alfa Holdings  UBS Group

Pay attention - limited upside

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

Pair Corralation between Alfa Holdings and UBS Group

Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the UBS Group. In addition to that, Alfa Holdings is 2.25 times more volatile than UBS Group AG. It trades about -0.18 of its total potential returns per unit of risk. UBS Group AG is currently generating about 0.19 per unit of volatility. If you would invest  16,496  in UBS Group AG on September 15, 2024 and sell it today you would earn a total of  2,903  from holding UBS Group AG or generate 17.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Alfa Holdings SA  vs.  UBS Group AG

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UBS Group AG

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UBS Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Holdings and UBS Group

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

The idea behind Alfa Holdings SA and UBS Group AG 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.