Correlation Between Alphanam and Everland Investment

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

By analyzing existing cross correlation between Alphanam ME and Everland Investment JSC, you can compare the effects of market volatilities on Alphanam and Everland Investment 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 Alphanam with a short position of Everland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Everland Investment.

Diversification Opportunities for Alphanam and Everland Investment

0.37

Correlation Coefficient

Alphanam  Everland Investment

Weak diversification

The 3 months correlation between Alphanam and Everland is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Everland Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everland Investment JSC and Alphanam 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 Alphanam ME are associated (or correlated) with Everland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everland Investment JSC has no effect on the direction of Alphanam i.e., Alphanam and Everland Investment go up and down completely randomly.

Pair Corralation between Alphanam and Everland Investment

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Everland Investment. But the stock apears to be less risky and, when comparing its historical volatility, Alphanam ME is 1.09 times less risky than Everland Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Everland Investment JSC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  310,000  in Everland Investment JSC on October 7, 2024 and sell it today you would earn a total of  292,000  from holding Everland Investment JSC or generate 94.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.73%
Values	Daily Returns

Alphanam ME  vs.  Everland Investment JSC

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME 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 technical and fundamental 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.

Everland Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everland Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alphanam and Everland Investment

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

The idea behind Alphanam ME and Everland Investment JSC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.