Correlation Between Alliance Financial and Minetech Resources
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Minetech Resources 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 Alliance Financial and Minetech Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Financial Group and Minetech Resources Bhd, you can compare the effects of market volatilities on Alliance Financial and Minetech Resources 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 Alliance Financial with a short position of Minetech Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Minetech Resources.
Diversification Opportunities for Alliance Financial and Minetech Resources
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alliance and Minetech is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources Bhd and Alliance Financial 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 Alliance Financial Group are associated (or correlated) with Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Minetech Resources go up and down completely randomly.
Pair Corralation between Alliance Financial and Minetech Resources
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.5 times more return on investment than Minetech Resources. However, Alliance Financial Group is 2.0 times less risky than Minetech Resources. It trades about 0.24 of its potential returns per unit of risk. Minetech Resources Bhd is currently generating about 0.02 per unit of risk. If you would invest 450.00 in Alliance Financial Group on August 27, 2024 and sell it today you would earn a total of 49.00 from holding Alliance Financial Group or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Financial Group vs. Minetech Resources Bhd
Performance |
| Timeline |
| Alliance Financial |
| Minetech Resources Bhd |
Alliance Financial and Minetech Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and Minetech Resources
The main advantage of trading using opposite Alliance Financial and Minetech Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Minetech Resources 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 Minetech Resources will offset losses from the drop in Minetech Resources' long position.| Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. OpenSys M Bhd | Alliance Financial vs. Insas Bhd |
| Minetech Resources vs. HeiTech Padu Bhd | Minetech Resources vs. Lysaght Galvanized Steel | Minetech Resources vs. Digistar Bhd | Minetech Resources 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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