Correlation Between Alfa Financial and VITEC SOFTWARE

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

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

Diversification Opportunities for Alfa Financial and VITEC SOFTWARE

-0.33

Correlation Coefficient

Alfa Financial  VITEC SOFTWARE

Very good diversification

The 3 months correlation between Alfa and VITEC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software 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 Alfa Financial 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 Financial Software 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 Alfa Financial i.e., Alfa Financial and VITEC SOFTWARE go up and down completely randomly.

Pair Corralation between Alfa Financial and VITEC SOFTWARE

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 0.92 times more return on investment than VITEC SOFTWARE. However, Alfa Financial Software is 1.08 times less risky than VITEC SOFTWARE. It trades about 0.07 of its potential returns per unit of risk. VITEC SOFTWARE GROUP is currently generating about 0.02 per unit of risk. If you would invest  232.00  in Alfa Financial Software on September 30, 2024 and sell it today you would earn a total of  18.00  from holding Alfa Financial Software or generate 7.76% return on investment over 90 days.

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

Alfa Financial Software  vs.  VITEC SOFTWARE GROUP

Alfa Financial Software

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VITEC SOFTWARE GROUP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VITEC SOFTWARE GROUP are ranked lower than 1 (%) 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alfa Financial and VITEC SOFTWARE

The main advantage of trading using opposite Alfa Financial and VITEC SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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 Alfa Financial Software 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.