Correlation Between Alarko Holding and Pergamon Status

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

By analyzing existing cross correlation between Alarko Holding AS and Pergamon Status Dis, you can compare the effects of market volatilities on Alarko Holding and Pergamon Status 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 Alarko Holding with a short position of Pergamon Status. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarko Holding and Pergamon Status.

Diversification Opportunities for Alarko Holding and Pergamon Status

0.36

Correlation Coefficient

Alarko Holding  Pergamon Status

Weak diversification

The 3 months correlation between Alarko and Pergamon is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Holding AS and Pergamon Status Dis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pergamon Status Dis and Alarko Holding 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 Alarko Holding AS are associated (or correlated) with Pergamon Status. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pergamon Status Dis has no effect on the direction of Alarko Holding i.e., Alarko Holding and Pergamon Status go up and down completely randomly.

Pair Corralation between Alarko Holding and Pergamon Status

Assuming the 90 days trading horizon Alarko Holding AS is expected to under-perform the Pergamon Status. But the stock apears to be less risky and, when comparing its historical volatility, Alarko Holding AS is 1.41 times less risky than Pergamon Status. The stock trades about -0.37 of its potential returns per unit of risk. The Pergamon Status Dis is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  11,440  in Pergamon Status Dis on February 6, 2024 and sell it today you would earn a total of  3,500  from holding Pergamon Status Dis or generate 30.59% return on investment over 90 days.

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

Alarko Holding AS  vs.  Pergamon Status Dis

Alarko Holding AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alarko Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Alarko Holding is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pergamon Status Dis

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pergamon Status Dis are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, Pergamon Status demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alarko Holding and Pergamon Status

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

The idea behind Alarko Holding AS and Pergamon Status Dis 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.