Correlation Between KOC METALURJI and Alfas Solar

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

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

Diversification Opportunities for KOC METALURJI and Alfas Solar

0.23

Correlation Coefficient

KOC METALURJI  Alfas Solar

Modest diversification

The 3 months correlation between KOC and Alfas is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding KOC METALURJI 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 KOC METALURJI 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 KOC METALURJI 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 KOC METALURJI i.e., KOC METALURJI and Alfas Solar go up and down completely randomly.

Pair Corralation between KOC METALURJI and Alfas Solar

Assuming the 90 days trading horizon KOC METALURJI is expected to under-perform the Alfas Solar. But the stock apears to be less risky and, when comparing its historical volatility, KOC METALURJI is 1.13 times less risky than Alfas Solar. The stock trades about -0.02 of its potential returns per unit of risk. The Alfas Solar Enerji is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,410  in Alfas Solar Enerji on October 26, 2024 and sell it today you would earn a total of  2,230  from holding Alfas Solar Enerji or generate 41.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

KOC METALURJI  vs.  Alfas Solar Enerji

KOC METALURJI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOC METALURJI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, KOC METALURJI is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Alfas Solar Enerji

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 15 (%) 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 KOC METALURJI and Alfas Solar

The main advantage of trading using opposite KOC METALURJI and Alfas Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOC METALURJI 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 KOC METALURJI 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.