Correlation Between ALT Telecom and Ekarat Engineering

Can any of the company-specific risk be diversified away by investing in both ALT Telecom and Ekarat Engineering 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 ALT Telecom and Ekarat Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALT Telecom Public and Ekarat Engineering Public, you can compare the effects of market volatilities on ALT Telecom and Ekarat Engineering 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 ALT Telecom with a short position of Ekarat Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALT Telecom and Ekarat Engineering.

Diversification Opportunities for ALT Telecom and Ekarat Engineering

-0.23

Correlation Coefficient

ALT Telecom  Ekarat Engineering

Very good diversification

The 3 months correlation between ALT and Ekarat is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ALT Telecom Public and Ekarat Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekarat Engineering Public and ALT Telecom 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 ALT Telecom Public are associated (or correlated) with Ekarat Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekarat Engineering Public has no effect on the direction of ALT Telecom i.e., ALT Telecom and Ekarat Engineering go up and down completely randomly.

Pair Corralation between ALT Telecom and Ekarat Engineering

Assuming the 90 days trading horizon ALT Telecom Public is expected to under-perform the Ekarat Engineering. In addition to that, ALT Telecom is 1.64 times more volatile than Ekarat Engineering Public. It trades about -0.22 of its total potential returns per unit of risk. Ekarat Engineering Public is currently generating about 0.01 per unit of volatility. If you would invest  101.00  in Ekarat Engineering Public on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Ekarat Engineering Public or generate 0.0% return on investment over 90 days.

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

ALT Telecom Public  vs.  Ekarat Engineering Public

ALT Telecom Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALT Telecom Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ekarat Engineering Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ekarat Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ekarat Engineering is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ALT Telecom and Ekarat Engineering

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

The idea behind ALT Telecom Public and Ekarat Engineering Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.