Correlation Between Alfa Holdings and Zebra Technologies

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

Diversification Opportunities for Alfa Holdings and Zebra Technologies

0.75

Correlation Coefficient

Alfa Holdings  Zebra Technologies

Poor diversification

The 3 months correlation between Alfa and Zebra is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies 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 Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and Zebra Technologies go up and down completely randomly.

Pair Corralation between Alfa Holdings and Zebra Technologies

Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the Zebra Technologies. But the preferred stock apears to be less risky and, when comparing its historical volatility, Alfa Holdings SA is 1.48 times less risky than Zebra Technologies. The preferred stock trades about -0.38 of its potential returns per unit of risk. The Zebra Technologies is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  8,200  in Zebra Technologies on December 23, 2024 and sell it today you would lose (2,614) from holding Zebra Technologies or give up 31.88% 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.  Zebra Technologies

Alfa Holdings SA

Risk-Adjusted Performance

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

Zebra Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zebra Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alfa Holdings and Zebra Technologies

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

The idea behind Alfa Holdings SA and Zebra Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.