Correlation Between Alpha Finance and Automata

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Can any of the company-specific risk be diversified away by investing in both Alpha Finance and Automata 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 Alpha Finance and Automata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Finance Lab and Automata, you can compare the effects of market volatilities on Alpha Finance and Automata 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 Alpha Finance with a short position of Automata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Finance and Automata.

Diversification Opportunities for Alpha Finance and Automata

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alpha and Automata is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Finance Lab and Automata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automata and Alpha Finance 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 Alpha Finance Lab are associated (or correlated) with Automata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automata has no effect on the direction of Alpha Finance i.e., Alpha Finance and Automata go up and down completely randomly.

Pair Corralation between Alpha Finance and Automata

Assuming the 90 days trading horizon Alpha Finance Lab is expected to generate 0.83 times more return on investment than Automata. However, Alpha Finance Lab is 1.21 times less risky than Automata. It trades about -0.14 of its potential returns per unit of risk. Automata is currently generating about -0.12 per unit of risk. If you would invest  17.00  in Alpha Finance Lab on April 8, 2022 and sell it today you would lose (5.00)  from holding Alpha Finance Lab or give up 29.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy90.91%
ValuesDaily Returns

Alpha Finance Lab  vs.  Automata

 Performance (%) 
      Timeline 
Alpha Finance Lab 
Alpha Performance
0 of 100
Over the last 90 days Alpha Finance Lab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's technical indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for Alpha Finance Lab investors.

Alpha Price Channel

Automata 
Automata Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Automata are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automata sustained solid returns over the last few months and may actually be approaching a breakup point.

Automata Price Channel

Alpha Finance and Automata Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alpha Finance and Automata

The main advantage of trading using opposite Alpha Finance and Automata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Finance position performs unexpectedly, Automata 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 Automata will offset losses from the drop in Automata's long position.
The idea behind Alpha Finance Lab and Automata 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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