Correlation Between Alpha Services and Karelia Tobacco

Can any of the company-specific risk be diversified away by investing in both Alpha Services and Karelia Tobacco 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 Alpha Services and Karelia Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Services and and Karelia Tobacco, you can compare the effects of market volatilities on Alpha Services and Karelia Tobacco 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 Alpha Services with a short position of Karelia Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Services and Karelia Tobacco.

Diversification Opportunities for Alpha Services and Karelia Tobacco

-0.71

Correlation Coefficient

Alpha Services  Karelia Tobacco

Pay attention - limited upside

The 3 months correlation between Alpha and Karelia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Services and and Karelia Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karelia Tobacco and Alpha Services 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 Alpha Services and are associated (or correlated) with Karelia Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karelia Tobacco has no effect on the direction of Alpha Services i.e., Alpha Services and Karelia Tobacco go up and down completely randomly.

Pair Corralation between Alpha Services and Karelia Tobacco

Assuming the 90 days trading horizon Alpha Services and is expected to generate 1.27 times more return on investment than Karelia Tobacco. However, Alpha Services is 1.27 times more volatile than Karelia Tobacco. It trades about 0.34 of its potential returns per unit of risk. Karelia Tobacco is currently generating about -0.07 per unit of risk. If you would invest  158.00  in Alpha Services and on December 24, 2024 and sell it today you would earn a total of  70.00  from holding Alpha Services and or generate 44.3% return on investment over 90 days.

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

Alpha Services and  vs.  Karelia Tobacco

Alpha Services

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Services and are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alpha Services sustained solid returns over the last few months and may actually be approaching a breakup point.

Karelia Tobacco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Karelia Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alpha Services and Karelia Tobacco

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

The idea behind Alpha Services and and Karelia Tobacco 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.