Correlation Between Alfas Solar and Kent Gida

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

Diversification Opportunities for Alfas Solar and Kent Gida

0.29

Correlation Coefficient

Alfas Solar  Kent Gida

Modest diversification

The 3 months correlation between Alfas and Kent is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Alfas Solar Enerji and Kent Gida Maddeleri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kent Gida Maddeleri 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 Kent Gida. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kent Gida Maddeleri has no effect on the direction of Alfas Solar i.e., Alfas Solar and Kent Gida go up and down completely randomly.

Pair Corralation between Alfas Solar and Kent Gida

Assuming the 90 days trading horizon Alfas Solar Enerji is expected to under-perform the Kent Gida. In addition to that, Alfas Solar is 1.4 times more volatile than Kent Gida Maddeleri. It trades about -0.1 of its total potential returns per unit of risk. Kent Gida Maddeleri is currently generating about -0.1 per unit of volatility. If you would invest  104,300  in Kent Gida Maddeleri on December 27, 2024 and sell it today you would lose (19,300) from holding Kent Gida Maddeleri or give up 18.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alfas Solar Enerji  vs.  Kent Gida Maddeleri

Alfas Solar Enerji

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alfas Solar Enerji has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Kent Gida Maddeleri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kent Gida Maddeleri has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alfas Solar and Kent Gida

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

The idea behind Alfas Solar Enerji and Kent Gida Maddeleri 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.