Correlation Between Alfa Holdings and RNI Negcios

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

By analyzing existing cross correlation between Alfa Holdings SA and RNI Negcios Imobilirios, you can compare the effects of market volatilities on Alfa Holdings and RNI Negcios 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 Holdings with a short position of RNI Negcios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Holdings and RNI Negcios.

Diversification Opportunities for Alfa Holdings and RNI Negcios

0.89

Correlation Coefficient

Alfa Holdings  RNI Negcios

Very poor diversification

The 3 months correlation between Alfa and RNI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and RNI Negcios Imobilirios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RNI Negcios Imobilirios and Alfa Holdings 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 Holdings SA are associated (or correlated) with RNI Negcios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RNI Negcios Imobilirios has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and RNI Negcios go up and down completely randomly.

Pair Corralation between Alfa Holdings and RNI Negcios

Assuming the 90 days trading horizon Alfa Holdings SA is expected to under-perform the RNI Negcios. In addition to that, Alfa Holdings is 1.35 times more volatile than RNI Negcios Imobilirios. It trades about -0.14 of its total potential returns per unit of risk. RNI Negcios Imobilirios is currently generating about -0.18 per unit of volatility. If you would invest  312.00  in RNI Negcios Imobilirios on September 18, 2024 and sell it today you would lose (72.00) from holding RNI Negcios Imobilirios or give up 23.08% of portfolio value over 90 days.

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

Alfa Holdings SA  vs.  RNI Negcios Imobilirios

Alfa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

RNI Negcios Imobilirios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RNI Negcios Imobilirios has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 Holdings and RNI Negcios

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

The idea behind Alfa Holdings SA and RNI Negcios Imobilirios 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.