Correlation Between Alarko Holding and Ayen Enerji

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

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

Diversification Opportunities for Alarko Holding and Ayen Enerji

0.9

Correlation Coefficient

Alarko Holding  Ayen Enerji

Almost no diversification

The 3 months correlation between Alarko and Ayen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Holding AS and Ayen Enerji AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayen Enerji AS and Alarko Holding 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 Alarko Holding AS are associated (or correlated) with Ayen Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayen Enerji AS has no effect on the direction of Alarko Holding i.e., Alarko Holding and Ayen Enerji go up and down completely randomly.

Pair Corralation between Alarko Holding and Ayen Enerji

Assuming the 90 days trading horizon Alarko Holding AS is expected to generate 0.87 times more return on investment than Ayen Enerji. However, Alarko Holding AS is 1.15 times less risky than Ayen Enerji. It trades about -0.05 of its potential returns per unit of risk. Ayen Enerji AS is currently generating about -0.1 per unit of risk. If you would invest  9,635  in Alarko Holding AS on September 23, 2024 and sell it today you would lose (165.00) from holding Alarko Holding AS or give up 1.71% of portfolio value over 90 days.

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

Alarko Holding AS  vs.  Ayen Enerji AS

Alarko Holding AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alarko Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Alarko Holding is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ayen Enerji AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ayen Enerji AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ayen Enerji is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alarko Holding and Ayen Enerji

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

The idea behind Alarko Holding AS and Ayen Enerji AS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.