Correlation Between Alfi and Arax Holdings

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

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

Diversification Opportunities for Alfi and Arax Holdings

-0.17

Correlation Coefficient

Alfi  Arax Holdings

Good diversification

The 3 months correlation between Alfi and Arax is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc and Arax Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arax Holdings Corp and Alfi 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 Alfi Inc are associated (or correlated) with Arax Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arax Holdings Corp has no effect on the direction of Alfi i.e., Alfi and Arax Holdings go up and down completely randomly.

Pair Corralation between Alfi and Arax Holdings

If you would invest  0.90  in Alfi Inc on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Alfi Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Alfi Inc  vs.  Arax Holdings Corp

Alfi Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Alfi is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Arax Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arax Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Alfi and Arax Holdings

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

The idea behind Alfi Inc and Arax Holdings Corp 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.