Correlation Between ALEFARM BREWING and VITEC SOFTWARE

Can any of the company-specific risk be diversified away by investing in both ALEFARM BREWING and VITEC SOFTWARE 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 ALEFARM BREWING and VITEC SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALEFARM BREWING DK 05 and VITEC SOFTWARE GROUP, you can compare the effects of market volatilities on ALEFARM BREWING and VITEC SOFTWARE 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 ALEFARM BREWING with a short position of VITEC SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALEFARM BREWING and VITEC SOFTWARE.

Diversification Opportunities for ALEFARM BREWING and VITEC SOFTWARE

-0.14

Correlation Coefficient

ALEFARM BREWING  VITEC SOFTWARE

Good diversification

The 3 months correlation between ALEFARM and VITEC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ALEFARM BREWING DK 05 and VITEC SOFTWARE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VITEC SOFTWARE GROUP and ALEFARM BREWING 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 ALEFARM BREWING DK 05 are associated (or correlated) with VITEC SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VITEC SOFTWARE GROUP has no effect on the direction of ALEFARM BREWING i.e., ALEFARM BREWING and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between ALEFARM BREWING and VITEC SOFTWARE

Assuming the 90 days horizon ALEFARM BREWING DK 05 is expected to under-perform the VITEC SOFTWARE. In addition to that, ALEFARM BREWING is 2.0 times more volatile than VITEC SOFTWARE GROUP. It trades about -0.03 of its total potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.03 per unit of volatility. If you would invest  4,308  in VITEC SOFTWARE GROUP on September 12, 2024 and sell it today you would earn a total of  124.00  from holding VITEC SOFTWARE GROUP or generate 2.88% return on investment over 90 days.

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

ALEFARM BREWING DK 05  vs.  VITEC SOFTWARE GROUP

ALEFARM BREWING DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALEFARM BREWING DK 05 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VITEC SOFTWARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ALEFARM BREWING and VITEC SOFTWARE

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

The idea behind ALEFARM BREWING DK 05 and VITEC SOFTWARE GROUP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.