Correlation Between Alphanam and Tienlen Steel

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

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

Diversification Opportunities for Alphanam and Tienlen Steel

0.81

Correlation Coefficient

Alphanam  Tienlen Steel

Very poor diversification

The 3 months correlation between Alphanam and Tienlen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp and Alphanam 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 Alphanam ME are associated (or correlated) with Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of Alphanam i.e., Alphanam and Tienlen Steel go up and down completely randomly.

Pair Corralation between Alphanam and Tienlen Steel

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Tienlen Steel. In addition to that, Alphanam is 2.01 times more volatile than Tienlen Steel Corp. It trades about -0.19 of its total potential returns per unit of risk. Tienlen Steel Corp is currently generating about -0.15 per unit of volatility. If you would invest  553,000  in Tienlen Steel Corp on September 12, 2024 and sell it today you would lose (75,000) from holding Tienlen Steel Corp or give up 13.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	50.77%
Values	Daily Returns

Alphanam ME  vs.  Tienlen Steel Corp

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tienlen Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tienlen Steel Corp 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 technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alphanam and Tienlen Steel

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

The idea behind Alphanam ME and Tienlen Steel Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.