Correlation Between ALERION CLEANPOWER and SIKA AG

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

By analyzing existing cross correlation between ALERION CLEANPOWER and SIKA AG UNSPADR, you can compare the effects of market volatilities on ALERION CLEANPOWER and SIKA AG 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 ALERION CLEANPOWER with a short position of SIKA AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and SIKA AG.

Diversification Opportunities for ALERION CLEANPOWER and SIKA AG

0.08

Correlation Coefficient

ALERION CLEANPOWER  SIKA AG

Significant diversification

The 3 months correlation between ALERION and SIKA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and SIKA AG UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIKA AG UNSPADR and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with SIKA AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIKA AG UNSPADR has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and SIKA AG go up and down completely randomly.

Pair Corralation between ALERION CLEANPOWER and SIKA AG

Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to generate 1.78 times more return on investment than SIKA AG. However, ALERION CLEANPOWER is 1.78 times more volatile than SIKA AG UNSPADR. It trades about 0.05 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about -0.19 per unit of risk. If you would invest  1,676  in ALERION CLEANPOWER on September 3, 2024 and sell it today you would earn a total of  104.00  from holding ALERION CLEANPOWER or generate 6.21% return on investment over 90 days.

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

ALERION CLEANPOWER  vs.  SIKA AG UNSPADR

ALERION CLEANPOWER

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALERION CLEANPOWER may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SIKA AG UNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIKA AG UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ALERION CLEANPOWER and SIKA AG

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

The idea behind ALERION CLEANPOWER and SIKA AG UNSPADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.