Correlation Between Ayen Enerji and Deva Holding

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

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

Diversification Opportunities for Ayen Enerji and Deva Holding

0.64

Correlation Coefficient

Ayen Enerji  Deva Holding

Poor diversification

The 3 months correlation between Ayen and Deva is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ayen Enerji AS and Deva Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deva Holding AS and Ayen Enerji 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 Ayen Enerji AS are associated (or correlated) with Deva Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deva Holding AS has no effect on the direction of Ayen Enerji i.e., Ayen Enerji and Deva Holding go up and down completely randomly.

Pair Corralation between Ayen Enerji and Deva Holding

Assuming the 90 days trading horizon Ayen Enerji is expected to generate 2.33 times less return on investment than Deva Holding. In addition to that, Ayen Enerji is 1.08 times more volatile than Deva Holding AS. It trades about 0.01 of its total potential returns per unit of risk. Deva Holding AS is currently generating about 0.03 per unit of volatility. If you would invest  6,312  in Deva Holding AS on September 25, 2024 and sell it today you would earn a total of  1,108  from holding Deva Holding AS or generate 17.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Ayen Enerji AS  vs.  Deva Holding AS

Ayen Enerji AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayen Enerji AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ayen Enerji is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Deva Holding AS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deva Holding AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Deva Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ayen Enerji and Deva Holding

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

The idea behind Ayen Enerji AS and Deva Holding AS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.