Correlation Between Alpha and Informatica

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

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

Diversification Opportunities for Alpha and Informatica

0.49

Correlation Coefficient

Alpha  Informatica

Very weak diversification

The 3 months correlation between Alpha and Informatica is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Alpha and Omega and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica and Alpha 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 and Omega are associated (or correlated) with Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of Alpha i.e., Alpha and Informatica go up and down completely randomly.

Pair Corralation between Alpha and Informatica

Given the investment horizon of 90 days Alpha is expected to generate 1.24 times less return on investment than Informatica. In addition to that, Alpha is 1.34 times more volatile than Informatica. It trades about 0.11 of its total potential returns per unit of risk. Informatica is currently generating about 0.18 per unit of volatility. If you would invest  1,944  in Informatica on May 17, 2025 and sell it today you would earn a total of  529.00  from holding Informatica or generate 27.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Alpha and Omega  vs.  Informatica

Alpha and Omega

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Informatica

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Informatica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha and Informatica

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

The idea behind Alpha and Omega and Informatica 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..