Correlation Between Sodas Sodyum and Alfas Solar

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

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

Diversification Opportunities for Sodas Sodyum and Alfas Solar

0.01

Correlation Coefficient

Sodas Sodyum  Alfas Solar

Significant diversification

The 3 months correlation between Sodas and Alfas is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sodas Sodyum Sanayi 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 Sodas Sodyum 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 Sodas Sodyum Sanayi 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 Sodas Sodyum i.e., Sodas Sodyum and Alfas Solar go up and down completely randomly.

Pair Corralation between Sodas Sodyum and Alfas Solar

Assuming the 90 days trading horizon Sodas Sodyum is expected to generate 4.44 times less return on investment than Alfas Solar. But when comparing it to its historical volatility, Sodas Sodyum Sanayi is 7.11 times less risky than Alfas Solar. It trades about 0.07 of its potential returns per unit of risk. Alfas Solar Enerji is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,086  in Alfas Solar Enerji on October 11, 2024 and sell it today you would earn a total of  4,064  from holding Alfas Solar Enerji or generate 131.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Sodas Sodyum Sanayi  vs.  Alfas Solar Enerji

Sodas Sodyum Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alfas Solar Enerji

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 17 (%) 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 Sodas Sodyum and Alfas Solar

The main advantage of trading using opposite Sodas Sodyum and Alfas Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodas Sodyum 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 Sodas Sodyum Sanayi 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.