Correlation Between Alfi and Arqit Quantum

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

Diversification Opportunities for Alfi and Arqit Quantum

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Alfi and Arqit is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alfi Inc and Arqit Quantum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arqit Quantum and Alfi 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 Alfi Inc are associated (or correlated) with Arqit Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arqit Quantum has no effect on the direction of Alfi i.e., Alfi and Arqit Quantum go up and down completely randomly.

Pair Corralation between Alfi and Arqit Quantum

Considering the 90-day investment horizon Alfi Inc is expected to under-perform the Arqit Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Alfi Inc is 1.2 times less risky than Arqit Quantum. The stock trades about -0.1 of its potential returns per unit of risk. The Arqit Quantum is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Arqit Quantum on April 6, 2022 and sell it today you would lose (325.00)  from holding Arqit Quantum or give up 32.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Alfi Inc  vs.  Arqit Quantum

 Performance (%) 
      Timeline 
Alfi Inc 
Alfi Performance
0 of 100
Over the last 90 days Alfi Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alfi Price Channel

Arqit Quantum 
Arqit Performance
0 of 100
Over the last 90 days Arqit Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Arqit Price Channel

Alfi and Arqit Quantum Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alfi and Arqit Quantum

The main advantage of trading using opposite Alfi and Arqit Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfi position performs unexpectedly, Arqit Quantum 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 Arqit Quantum will offset losses from the drop in Arqit Quantum's long position.
The idea behind Alfi Inc and Arqit Quantum 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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