Correlation Between Global Knafaim and Airtouch Solar

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

By analyzing existing cross correlation between Global Knafaim Leasing and Airtouch Solar, you can compare the effects of market volatilities on Global Knafaim and Airtouch 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 Global Knafaim with a short position of Airtouch Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Knafaim and Airtouch Solar.

Diversification Opportunities for Global Knafaim and Airtouch Solar

-0.9

Correlation Coefficient

Global Knafaim  Airtouch Solar

Pay attention - limited upside

The 3 months correlation between Global and Airtouch is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global Knafaim Leasing and Airtouch Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtouch Solar and Global Knafaim 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 Global Knafaim Leasing are associated (or correlated) with Airtouch Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtouch Solar has no effect on the direction of Global Knafaim i.e., Global Knafaim and Airtouch Solar go up and down completely randomly.

Pair Corralation between Global Knafaim and Airtouch Solar

Assuming the 90 days trading horizon Global Knafaim Leasing is expected to generate 0.68 times more return on investment than Airtouch Solar. However, Global Knafaim Leasing is 1.47 times less risky than Airtouch Solar. It trades about 0.29 of its potential returns per unit of risk. Airtouch Solar is currently generating about -0.21 per unit of risk. If you would invest  5,720  in Global Knafaim Leasing on September 12, 2024 and sell it today you would earn a total of  2,310  from holding Global Knafaim Leasing or generate 40.38% return on investment over 90 days.

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

Global Knafaim Leasing  vs.  Airtouch Solar

Global Knafaim Leasing

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Knafaim Leasing are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Global Knafaim sustained solid returns over the last few months and may actually be approaching a breakup point.

Airtouch Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airtouch Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Global Knafaim and Airtouch Solar

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

The idea behind Global Knafaim Leasing and Airtouch Solar 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.