Correlation Between Kent Gida and Alfas Solar

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

By analyzing existing cross correlation between Kent Gida Maddeleri and Alfas Solar Enerji, you can compare the effects of market volatilities on Kent Gida and Alfas Solar 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 Kent Gida with a short position of Alfas Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kent Gida and Alfas Solar.

Diversification Opportunities for Kent Gida and Alfas Solar

0.84

Correlation Coefficient

Kent Gida  Alfas Solar

Very poor diversification

The 3 months correlation between Kent and Alfas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kent Gida Maddeleri and Alfas Solar Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfas Solar Enerji and Kent Gida 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 Kent Gida Maddeleri are associated (or correlated) with Alfas Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfas Solar Enerji has no effect on the direction of Kent Gida i.e., Kent Gida and Alfas Solar go up and down completely randomly.

Pair Corralation between Kent Gida and Alfas Solar

Assuming the 90 days trading horizon Kent Gida Maddeleri is expected to generate 1.6 times more return on investment than Alfas Solar. However, Kent Gida is 1.6 times more volatile than Alfas Solar Enerji. It trades about 0.23 of its potential returns per unit of risk. Alfas Solar Enerji is currently generating about 0.28 per unit of risk. If you would invest  85,400  in Kent Gida Maddeleri on September 22, 2024 and sell it today you would earn a total of  19,900  from holding Kent Gida Maddeleri or generate 23.3% return on investment over 90 days.

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

Kent Gida Maddeleri  vs.  Alfas Solar Enerji

Kent Gida Maddeleri

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kent Gida Maddeleri are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Kent Gida unveiled solid returns over the last few months and may actually be approaching a breakup point.

Alfas Solar Enerji

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Alfas Solar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kent Gida and Alfas Solar

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

The idea behind Kent Gida Maddeleri and Alfas Solar Enerji 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.