Correlation Between Alaska Air and TenX Keane

Can any of the company-specific risk be diversified away by investing in both Alaska Air and TenX Keane 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 Alaska Air and TenX Keane into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alaska Air Group and TenX Keane Acquisition, you can compare the effects of market volatilities on Alaska Air and TenX Keane 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 Alaska Air with a short position of TenX Keane. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and TenX Keane.

Diversification Opportunities for Alaska Air and TenX Keane

0.45

Correlation Coefficient

Alaska Air  TenX Keane

Very weak diversification

The 3 months correlation between Alaska and TenX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and TenX Keane Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TenX Keane Acquisition and Alaska Air 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 Alaska Air Group are associated (or correlated) with TenX Keane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TenX Keane Acquisition has no effect on the direction of Alaska Air i.e., Alaska Air and TenX Keane go up and down completely randomly.

Pair Corralation between Alaska Air and TenX Keane

Considering the 90-day investment horizon Alaska Air is expected to generate 5.12 times less return on investment than TenX Keane. But when comparing it to its historical volatility, Alaska Air Group is 10.7 times less risky than TenX Keane. It trades about 0.13 of its potential returns per unit of risk. TenX Keane Acquisition is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,110  in TenX Keane Acquisition on September 20, 2024 and sell it today you would lose (1,110) from holding TenX Keane Acquisition or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.66%
Values	Daily Returns

Alaska Air Group  vs.  TenX Keane Acquisition

Alaska Air Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Alaska Air disclosed solid returns over the last few months and may actually be approaching a breakup point.

TenX Keane Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TenX Keane Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, TenX Keane is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alaska Air and TenX Keane

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

The idea behind Alaska Air Group and TenX Keane Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.