Correlation Between Alimak Hek and Jetpak Top

Can any of the company-specific risk be diversified away by investing in both Alimak Hek and Jetpak Top 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 Alimak Hek and Jetpak Top into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alimak Hek Group and Jetpak Top Holding, you can compare the effects of market volatilities on Alimak Hek and Jetpak Top 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 Alimak Hek with a short position of Jetpak Top. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimak Hek and Jetpak Top.

Diversification Opportunities for Alimak Hek and Jetpak Top

0.61

Correlation Coefficient

Alimak Hek  Jetpak Top

Poor diversification

The 3 months correlation between Alimak and Jetpak is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alimak Hek Group and Jetpak Top Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jetpak Top Holding and Alimak Hek 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 Alimak Hek Group are associated (or correlated) with Jetpak Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jetpak Top Holding has no effect on the direction of Alimak Hek i.e., Alimak Hek and Jetpak Top go up and down completely randomly.

Pair Corralation between Alimak Hek and Jetpak Top

Assuming the 90 days trading horizon Alimak Hek Group is expected to generate 1.42 times more return on investment than Jetpak Top. However, Alimak Hek is 1.42 times more volatile than Jetpak Top Holding. It trades about 0.14 of its potential returns per unit of risk. Jetpak Top Holding is currently generating about 0.08 per unit of risk. If you would invest  10,500  in Alimak Hek Group on September 3, 2024 and sell it today you would earn a total of  1,440  from holding Alimak Hek Group or generate 13.71% return on investment over 90 days.

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

Alimak Hek Group  vs.  Jetpak Top Holding

Alimak Hek Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alimak Hek Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alimak Hek unveiled solid returns over the last few months and may actually be approaching a breakup point.

Jetpak Top Holding

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jetpak Top Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jetpak Top is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alimak Hek and Jetpak Top

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

The idea behind Alimak Hek Group and Jetpak Top Holding 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.