Correlation Between Alfa Holdings and Financeira Alfa

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

Diversification Opportunities for Alfa Holdings and Financeira Alfa

0.0

Correlation Coefficient

Alfa Holdings  Financeira Alfa

Pay attention - limited upside

The 3 months correlation between Alfa and Financeira is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Holdings SA and Financeira Alfa SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financeira Alfa SA 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 Financeira Alfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financeira Alfa SA has no effect on the direction of Alfa Holdings i.e., Alfa Holdings and Financeira Alfa go up and down completely randomly.

Pair Corralation between Alfa Holdings and Financeira Alfa

If you would invest  895.00  in Alfa Holdings SA on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Alfa Holdings SA or generate 1.56% return on investment over 90 days.

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

Alfa Holdings SA  vs.  Financeira Alfa SA

Alfa Holdings SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Holdings SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Alfa Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Financeira Alfa SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Financeira Alfa SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Financeira Alfa is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alfa Holdings and Financeira Alfa

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

The idea behind Alfa Holdings SA and Financeira Alfa SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.