Correlation Between VHAI and Alfi

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

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

Diversification Opportunities for VHAI and Alfi

-0.34

Correlation Coefficient

VHAI  Alfi

Very good diversification

The 3 months correlation between VHAI and Alfi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding VHAI and Alfi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfi Inc and VHAI 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 VHAI are associated (or correlated) with Alfi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfi Inc has no effect on the direction of VHAI i.e., VHAI and Alfi go up and down completely randomly.

Pair Corralation between VHAI and Alfi

If you would invest  0.82  in VHAI on September 16, 2024 and sell it today you would lose (0.25) from holding VHAI or give up 30.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.85%
Values	Daily Returns

VHAI  vs.  Alfi Inc

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, VHAI is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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.

Pair Trading with VHAI and Alfi

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

The idea behind VHAI and Alfi Inc 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.

Check out your portfolio center.

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.