Correlation Between Compagnie and Alfa Financial

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

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

Diversification Opportunities for Compagnie and Alfa Financial

0.58

Correlation Coefficient

Compagnie  Alfa Financial

Very weak diversification

The 3 months correlation between Compagnie and Alfa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Compagnie i.e., Compagnie and Alfa Financial go up and down completely randomly.

Pair Corralation between Compagnie and Alfa Financial

Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.85 times more return on investment than Alfa Financial. However, Compagnie is 1.85 times more volatile than Alfa Financial Software. It trades about 0.15 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.1 per unit of risk. If you would invest  7,943  in Compagnie de Saint Gobain on April 22, 2025 and sell it today you would earn a total of  2,212  from holding Compagnie de Saint Gobain or generate 27.85% return on investment over 90 days.

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

Compagnie de Saint Gobain  vs.  Alfa Financial Software

Compagnie de Saint

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compagnie exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alfa Financial Software

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Compagnie and Alfa Financial

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

The idea behind Compagnie de Saint Gobain and Alfa Financial Software 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.