Correlation Between ALK Abell and Gabriel Holding

Can any of the company-specific risk be diversified away by investing in both ALK Abell and Gabriel Holding 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 ALK Abell and Gabriel Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALK Abell AS and Gabriel Holding, you can compare the effects of market volatilities on ALK Abell and Gabriel Holding 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 ALK Abell with a short position of Gabriel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Gabriel Holding.

Diversification Opportunities for ALK Abell and Gabriel Holding

0.49

Correlation Coefficient

ALK Abell  Gabriel Holding

Very weak diversification

The 3 months correlation between ALK and Gabriel is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Gabriel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabriel Holding and ALK Abell 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 ALK Abell AS are associated (or correlated) with Gabriel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabriel Holding has no effect on the direction of ALK Abell i.e., ALK Abell and Gabriel Holding go up and down completely randomly.

Pair Corralation between ALK Abell and Gabriel Holding

Assuming the 90 days trading horizon ALK Abell AS is expected to generate 1.4 times more return on investment than Gabriel Holding. However, ALK Abell is 1.4 times more volatile than Gabriel Holding. It trades about -0.01 of its potential returns per unit of risk. Gabriel Holding is currently generating about -0.37 per unit of risk. If you would invest  16,440  in ALK Abell AS on October 5, 2024 and sell it today you would lose (170.00) from holding ALK Abell AS or give up 1.03% of portfolio value over 90 days.

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

ALK Abell AS  vs.  Gabriel Holding

ALK Abell AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALK Abell AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ALK Abell is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gabriel Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gabriel Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ALK Abell and Gabriel Holding

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

The idea behind ALK Abell AS and Gabriel 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.