Correlation Between DENTSPLY SIRONA and Alfa Holdings

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

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

Diversification Opportunities for DENTSPLY SIRONA and Alfa Holdings

-0.42

Correlation Coefficient

DENTSPLY SIRONA  Alfa Holdings

Very good diversification

The 3 months correlation between DENTSPLY and Alfa is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DENTSPLY SIRONA and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings SA and DENTSPLY SIRONA 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 DENTSPLY SIRONA are associated (or correlated) with Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of DENTSPLY SIRONA i.e., DENTSPLY SIRONA and Alfa Holdings go up and down completely randomly.

Pair Corralation between DENTSPLY SIRONA and Alfa Holdings

Assuming the 90 days trading horizon DENTSPLY SIRONA is expected to generate 4.22 times less return on investment than Alfa Holdings. But when comparing it to its historical volatility, DENTSPLY SIRONA is 61.21 times less risky than Alfa Holdings. It trades about 0.24 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  909.00  in Alfa Holdings SA on October 10, 2024 and sell it today you would lose (20.00) from holding Alfa Holdings SA or give up 2.2% of portfolio value over 90 days.

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

DENTSPLY SIRONA  vs.  Alfa Holdings SA

DENTSPLY SIRONA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DENTSPLY SIRONA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DENTSPLY SIRONA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alfa Holdings SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Holdings SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Alfa Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DENTSPLY SIRONA and Alfa Holdings

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

The idea behind DENTSPLY SIRONA and Alfa Holdings SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.