Correlation Between Alfa Corp and AmTrust Financial

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

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

Diversification Opportunities for Alfa Corp and AmTrust Financial

0.0

Correlation Coefficient

Alfa Corp  AmTrust Financial

Pay attention - limited upside

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

Pair Corralation between Alfa Corp and AmTrust Financial

If you would invest (100.00) in AmTrust Financial Services on January 25, 2024 and sell it today you would earn a total of  100.00  from holding AmTrust Financial Services 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

Alfa Corp  vs.  AmTrust Financial Services

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.

AmTrust Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alfa Corp and AmTrust Financial

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

The idea behind Alfa Corp and AmTrust Financial Services 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.