Correlation Between Alfas Solar and Alkim Kagit

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

Diversification Opportunities for Alfas Solar and Alkim Kagit

0.91

Correlation Coefficient

Alfas Solar  Alkim Kagit

Almost no diversification

The 3 months correlation between Alfas and Alkim is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alfas Solar Enerji and Alkim Kagit Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkim Kagit 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 Alkim Kagit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkim Kagit Sanayi has no effect on the direction of Alfas Solar i.e., Alfas Solar and Alkim Kagit go up and down completely randomly.

Pair Corralation between Alfas Solar and Alkim Kagit

Assuming the 90 days trading horizon Alfas Solar Enerji is expected to generate 2.47 times more return on investment than Alkim Kagit. However, Alfas Solar is 2.47 times more volatile than Alkim Kagit Sanayi. It trades about 0.05 of its potential returns per unit of risk. Alkim Kagit Sanayi is currently generating about 0.04 per unit of risk. If you would invest  3,048  in Alfas Solar Enerji on October 3, 2024 and sell it today you would earn a total of  3,747  from holding Alfas Solar Enerji or generate 122.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.39%
Values	Daily Returns

Alfas Solar Enerji  vs.  Alkim Kagit Sanayi

Alfas Solar Enerji

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 14 (%) 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.

Alkim Kagit Sanayi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alkim Kagit Sanayi are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Alkim Kagit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfas Solar and Alkim Kagit

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

The idea behind Alfas Solar Enerji and Alkim Kagit 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.