Correlation Between COMBA TELECOM and Alfen NV

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

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

Diversification Opportunities for COMBA TELECOM and Alfen NV

0.58

Correlation Coefficient

COMBA TELECOM  Alfen NV

Very weak diversification

The 3 months correlation between COMBA and Alfen is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Alfen NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfen NV and COMBA TELECOM 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 COMBA TELECOM SYST are associated (or correlated) with Alfen NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfen NV has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and Alfen NV go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Alfen NV

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to generate 0.73 times more return on investment than Alfen NV. However, COMBA TELECOM SYST is 1.36 times less risky than Alfen NV. It trades about 0.22 of its potential returns per unit of risk. Alfen NV is currently generating about 0.05 per unit of risk. If you would invest  12.00  in COMBA TELECOM SYST on September 27, 2024 and sell it today you would earn a total of  1.00  from holding COMBA TELECOM SYST or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

COMBA TELECOM SYST  vs.  Alfen NV

COMBA TELECOM SYST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMBA TELECOM SYST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, COMBA TELECOM is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with COMBA TELECOM and Alfen NV

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

The idea behind COMBA TELECOM SYST and Alfen NV 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.