Correlation Between Alarko Holding and Tekfen Holding

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

Diversification Opportunities for Alarko Holding and Tekfen Holding

-0.14

Correlation Coefficient

Alarko Holding  Tekfen Holding

Good diversification

The 3 months correlation between Alarko and Tekfen is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Holding AS and Tekfen Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekfen Holding 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 Tekfen Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekfen Holding AS has no effect on the direction of Alarko Holding i.e., Alarko Holding and Tekfen Holding go up and down completely randomly.

Pair Corralation between Alarko Holding and Tekfen Holding

Assuming the 90 days trading horizon Alarko Holding AS is expected to under-perform the Tekfen Holding. But the stock apears to be less risky and, when comparing its historical volatility, Alarko Holding AS is 1.45 times less risky than Tekfen Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Tekfen Holding AS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  7,300  in Tekfen Holding AS on December 25, 2024 and sell it today you would earn a total of  5,700  from holding Tekfen Holding AS or generate 78.08% return on investment over 90 days.

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

Alarko Holding AS  vs.  Tekfen Holding AS

Alarko Holding AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alarko Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Alarko Holding is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Tekfen Holding AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alarko Holding and Tekfen Holding

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

The idea behind Alarko Holding AS and Tekfen Holding 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.