Correlation Between Esfera Robotics and ALM Classic

Can any of the company-specific risk be diversified away by investing in both Esfera Robotics and ALM Classic 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 Esfera Robotics and ALM Classic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Esfera Robotics R and ALM Classic RA, you can compare the effects of market volatilities on Esfera Robotics and ALM Classic 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 Esfera Robotics with a short position of ALM Classic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esfera Robotics and ALM Classic.

Diversification Opportunities for Esfera Robotics and ALM Classic

0.91

Correlation Coefficient

Esfera Robotics  ALM Classic

Almost no diversification

The 3 months correlation between Esfera and ALM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Esfera Robotics R and ALM Classic RA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM Classic RA and Esfera Robotics 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 Esfera Robotics R are associated (or correlated) with ALM Classic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM Classic RA has no effect on the direction of Esfera Robotics i.e., Esfera Robotics and ALM Classic go up and down completely randomly.

Pair Corralation between Esfera Robotics and ALM Classic

Assuming the 90 days trading horizon Esfera Robotics R is expected to generate 4.97 times more return on investment than ALM Classic. However, Esfera Robotics is 4.97 times more volatile than ALM Classic RA. It trades about 0.31 of its potential returns per unit of risk. ALM Classic RA is currently generating about 0.24 per unit of risk. If you would invest  28,896  in Esfera Robotics R on September 7, 2024 and sell it today you would earn a total of  6,562  from holding Esfera Robotics R or generate 22.71% return on investment over 90 days.

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

Esfera Robotics R  vs.  ALM Classic RA

Esfera Robotics R

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Esfera Robotics R are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, Esfera Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

ALM Classic RA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ALM Classic RA are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, ALM Classic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Esfera Robotics and ALM Classic

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

The idea behind Esfera Robotics R and ALM Classic RA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..