Correlation Between Alfas Solar and Galata Wind

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

Diversification Opportunities for Alfas Solar and Galata Wind

0.79

Correlation Coefficient

Alfas Solar  Galata Wind

Poor diversification

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

Pair Corralation between Alfas Solar and Galata Wind

Assuming the 90 days trading horizon Alfas Solar Enerji is expected to under-perform the Galata Wind. In addition to that, Alfas Solar is 1.19 times more volatile than Galata Wind Enerji. It trades about -0.02 of its total potential returns per unit of risk. Galata Wind Enerji is currently generating about 0.03 per unit of volatility. If you would invest  2,839  in Galata Wind Enerji on September 23, 2024 and sell it today you would earn a total of  131.00  from holding Galata Wind Enerji or generate 4.61% 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.  Galata Wind Enerji

Alfas Solar Enerji

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 7 (%) 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.

Galata Wind Enerji

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Galata Wind Enerji are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Galata Wind may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alfas Solar and Galata Wind

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

The idea behind Alfas Solar Enerji and Galata Wind Enerji 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.