Correlation Between Alpha Finance and AERGO

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Can any of the company-specific risk be diversified away by investing in both Alpha Finance and AERGO 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 AERGO 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 AERGO, you can compare the effects of market volatilities on Alpha Finance and AERGO 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 AERGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Finance and AERGO.

Diversification Opportunities for Alpha Finance and AERGO

0.77
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Alpha Finance and AERGO

Assuming the 90 days trading horizon Alpha Finance Lab is expected to under-perform the AERGO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Alpha Finance Lab is 1.1 times less risky than AERGO. The crypto coin trades about -0.39 of its potential returns per unit of risk. The AERGO is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  24.00  in AERGO on February 17, 2022 and sell it today you would lose (9.00)  from holding AERGO or give up 37.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Alpha Finance Lab  vs.  AERGO

 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 June 2022. The current disturbance may also be a sign of long term up-swing for Alpha Finance Lab investors.

Alpha Price Channel

AERGO 
AERGO Performance
0 of 100
Over the last 90 days AERGO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, AERGO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

AERGO Price Channel

Alpha Finance and AERGO Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Alpha Finance and AERGO

The main advantage of trading using opposite Alpha Finance and AERGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Finance position performs unexpectedly, AERGO 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 AERGO will offset losses from the drop in AERGO's long position.
The idea behind Alpha Finance Lab and AERGO 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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