Correlation Between Alfas Solar and Akcansa Cimento

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

By analyzing existing cross correlation between Alfas Solar Enerji and Akcansa Cimento Sanayi, you can compare the effects of market volatilities on Alfas Solar and Akcansa Cimento 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 Alfas Solar with a short position of Akcansa Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfas Solar and Akcansa Cimento.

Diversification Opportunities for Alfas Solar and Akcansa Cimento

0.79

Correlation Coefficient

Alfas Solar  Akcansa Cimento

Poor diversification

The 3 months correlation between Alfas and Akcansa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Alfas Solar Enerji and Akcansa Cimento Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akcansa Cimento Sanayi and Alfas Solar 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 Alfas Solar Enerji are associated (or correlated) with Akcansa Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akcansa Cimento Sanayi has no effect on the direction of Alfas Solar i.e., Alfas Solar and Akcansa Cimento go up and down completely randomly.

Pair Corralation between Alfas Solar and Akcansa Cimento

Assuming the 90 days trading horizon Alfas Solar Enerji is expected to generate 1.28 times more return on investment than Akcansa Cimento. However, Alfas Solar is 1.28 times more volatile than Akcansa Cimento Sanayi. It trades about 0.23 of its potential returns per unit of risk. Akcansa Cimento Sanayi is currently generating about 0.17 per unit of risk. If you would invest  5,180  in Alfas Solar Enerji on October 25, 2024 and sell it today you would earn a total of  2,460  from holding Alfas Solar Enerji or generate 47.49% return on investment over 90 days.

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

Alfas Solar Enerji  vs.  Akcansa Cimento Sanayi

Alfas Solar Enerji

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Alfas Solar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Akcansa Cimento Sanayi

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Akcansa Cimento Sanayi are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Akcansa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfas Solar and Akcansa Cimento

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

The idea behind Alfas Solar Enerji and Akcansa Cimento Sanayi 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 Transaction History module to view history of all your transactions and understand their impact on performance.