Correlation Between MClean Technologies and Alliance Financial
Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Alliance Financial 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 MClean Technologies and Alliance Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MClean Technologies Bhd and Alliance Financial Group, you can compare the effects of market volatilities on MClean Technologies and Alliance Financial 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 MClean Technologies with a short position of Alliance Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and Alliance Financial.
Diversification Opportunities for MClean Technologies and Alliance Financial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MClean and Alliance is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Alliance Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Financial and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Alliance Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Financial has no effect on the direction of MClean Technologies i.e., MClean Technologies and Alliance Financial go up and down completely randomly.
Pair Corralation between MClean Technologies and Alliance Financial
Assuming the 90 days trading horizon MClean Technologies Bhd is expected to generate 5.9 times more return on investment than Alliance Financial. However, MClean Technologies is 5.9 times more volatile than Alliance Financial Group. It trades about 0.06 of its potential returns per unit of risk. Alliance Financial Group is currently generating about 0.12 per unit of risk. If you would invest 14.00 in MClean Technologies Bhd on September 2, 2024 and sell it today you would earn a total of 12.00 from holding MClean Technologies Bhd or generate 85.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MClean Technologies Bhd vs. Alliance Financial Group
Performance |
| Timeline |
| MClean Technologies Bhd |
| Alliance Financial |
MClean Technologies and Alliance Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MClean Technologies and Alliance Financial
The main advantage of trading using opposite MClean Technologies and Alliance Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MClean Technologies position performs unexpectedly, Alliance Financial 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 Alliance Financial will offset losses from the drop in Alliance Financial's long position.| MClean Technologies vs. Digistar Bhd | MClean Technologies vs. Minetech Resources Bhd | MClean Technologies vs. Swift Haulage Bhd | MClean Technologies vs. Bina Darulaman Bhd |
| Alliance Financial vs. Aeon Credit Service | Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. Swift Haulage Bhd |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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