Correlation Between Alfa Financial and United Internet

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

Diversification Opportunities for Alfa Financial and United Internet

-0.65

Correlation Coefficient

Alfa Financial  United Internet

Excellent diversification

The 3 months correlation between Alfa and United is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Alfa Financial i.e., Alfa Financial and United Internet go up and down completely randomly.

Pair Corralation between Alfa Financial and United Internet

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.02 times more return on investment than United Internet. However, Alfa Financial is 1.02 times more volatile than United Internet AG. It trades about 0.11 of its potential returns per unit of risk. United Internet AG is currently generating about -0.13 per unit of risk. If you would invest  19,004  in Alfa Financial Software on September 4, 2024 and sell it today you would earn a total of  2,896  from holding Alfa Financial Software or generate 15.24% return on investment over 90 days.

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

Alfa Financial Software  vs.  United Internet AG

Alfa Financial Software

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

United Internet AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Internet AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alfa Financial and United Internet

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

The idea behind Alfa Financial Software and United Internet AG 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 Anywhere module to track or share privately all of your investments from the convenience of any device.