Correlation Between Allcity Insurance and Alfa Corp

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

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

Diversification Opportunities for Allcity Insurance and Alfa Corp

0.0

Correlation Coefficient

Allcity Insurance  Alfa Corp

Pay attention - limited upside

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

Pair Corralation between Allcity Insurance and Alfa Corp

If you would invest (100.00) in Alfa Corp on January 20, 2024 and sell it today you would earn a total of  100.00  from holding Alfa Corp or generate -100.0% return on investment over 90 days.

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

Allcity Insurance Co  vs.  Alfa Corp

Allcity Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alfa Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alfa Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allcity Insurance and Alfa Corp

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

The idea behind Allcity Insurance Co and Alfa 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.