Correlation Between Construction JSC and Alphanam

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

By analyzing existing cross correlation between Construction JSC No5 and Alphanam ME, you can compare the effects of market volatilities on Construction JSC and Alphanam 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 Construction JSC with a short position of Alphanam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and Alphanam.

Diversification Opportunities for Construction JSC and Alphanam

-0.26

Correlation Coefficient

Construction JSC  Alphanam

Very good diversification

The 3 months correlation between Construction and Alphanam is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and Alphanam ME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphanam ME and Construction JSC 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 Construction JSC No5 are associated (or correlated) with Alphanam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphanam ME has no effect on the direction of Construction JSC i.e., Construction JSC and Alphanam go up and down completely randomly.

Pair Corralation between Construction JSC and Alphanam

Assuming the 90 days trading horizon Construction JSC No5 is expected to under-perform the Alphanam. In addition to that, Construction JSC is 1.07 times more volatile than Alphanam ME. It trades about -0.11 of its total potential returns per unit of risk. Alphanam ME is currently generating about 0.22 per unit of volatility. If you would invest  480,000  in Alphanam ME on December 30, 2024 and sell it today you would earn a total of  150,000  from holding Alphanam ME or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.06%
Values	Daily Returns

Construction JSC No5  vs.  Alphanam ME

Construction JSC No5

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction JSC No5 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Alphanam ME

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphanam ME are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Alphanam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Construction JSC and Alphanam

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

The idea behind Construction JSC No5 and Alphanam ME 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.