Correlation Between Alfa Financial and Haier Smart

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

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

Diversification Opportunities for Alfa Financial and Haier Smart

0.77

Correlation Coefficient

Alfa Financial  Haier Smart

Poor diversification

The 3 months correlation between Alfa and Haier is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home and Alfa Financial 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 Financial Software are associated (or correlated) with Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Alfa Financial i.e., Alfa Financial and Haier Smart go up and down completely randomly.

Pair Corralation between Alfa Financial and Haier Smart

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 1.12 times more return on investment than Haier Smart. However, Alfa Financial is 1.12 times more volatile than Haier Smart Home. It trades about -0.01 of its potential returns per unit of risk. Haier Smart Home is currently generating about -0.01 per unit of risk. If you would invest  258.00  in Alfa Financial Software on March 25, 2025 and sell it today you would lose (6.00) from holding Alfa Financial Software or give up 2.33% of portfolio value over 90 days.

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

Alfa Financial Software  vs.  Haier Smart Home

Alfa Financial Software

Risk-Adjusted Performance

Very Weak

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

Haier Smart Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Haier Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Haier Smart is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alfa Financial and Haier Smart

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

The idea behind Alfa Financial Software and Haier Smart Home 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.