Correlation Between Alfen NV and Ilika Plc

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

By analyzing existing cross correlation between Alfen NV and Ilika plc, you can compare the effects of market volatilities on Alfen NV and Ilika Plc 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 Alfen NV with a short position of Ilika Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfen NV and Ilika Plc.

Diversification Opportunities for Alfen NV and Ilika Plc

0.26

Correlation Coefficient

Alfen NV  Ilika Plc

Modest diversification

The 3 months correlation between Alfen and Ilika is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alfen NV and Ilika plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilika plc and Alfen NV 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 Alfen NV are associated (or correlated) with Ilika Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilika plc has no effect on the direction of Alfen NV i.e., Alfen NV and Ilika Plc go up and down completely randomly.

Pair Corralation between Alfen NV and Ilika Plc

Assuming the 90 days horizon Alfen NV is expected to under-perform the Ilika Plc. But the otc stock apears to be less risky and, when comparing its historical volatility, Alfen NV is 1.76 times less risky than Ilika Plc. The otc stock trades about -0.12 of its potential returns per unit of risk. The Ilika plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Ilika plc on September 10, 2024 and sell it today you would lose (12.00) from holding Ilika plc or give up 32.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.28%
Values	Daily Returns

Alfen NV  vs.  Ilika plc

Alfen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfen NV 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 fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ilika plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ilika plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Alfen NV and Ilika Plc

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

The idea behind Alfen NV and Ilika plc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.