Correlation Between Turk Tuborg and Alfas Solar

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

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

Diversification Opportunities for Turk Tuborg and Alfas Solar

-0.4

Correlation Coefficient

Turk Tuborg  Alfas Solar

Very good diversification

The 3 months correlation between Turk and Alfas is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Turk Tuborg Bira 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 Turk Tuborg 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 Turk Tuborg Bira 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 Turk Tuborg i.e., Turk Tuborg and Alfas Solar go up and down completely randomly.

Pair Corralation between Turk Tuborg and Alfas Solar

Assuming the 90 days trading horizon Turk Tuborg Bira is expected to generate 0.75 times more return on investment than Alfas Solar. However, Turk Tuborg Bira is 1.33 times less risky than Alfas Solar. It trades about 0.11 of its potential returns per unit of risk. Alfas Solar Enerji is currently generating about 0.03 per unit of risk. If you would invest  3,672  in Turk Tuborg Bira on December 11, 2024 and sell it today you would earn a total of  11,548  from holding Turk Tuborg Bira or generate 314.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Turk Tuborg Bira  vs.  Alfas Solar Enerji

Turk Tuborg Bira

Risk-Adjusted Performance

Weak

Over the last 90 days Turk Tuborg Bira has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Turk Tuborg 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

Very Weak

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

Pair Trading with Turk Tuborg and Alfas Solar

The main advantage of trading using opposite Turk Tuborg and Alfas Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turk Tuborg 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 Turk Tuborg Bira 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.