Correlation Between Alliance Financial and Impiana Hotels
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Impiana Hotels 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 Impiana Hotels 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 Impiana Hotels Bhd, you can compare the effects of market volatilities on Alliance Financial and Impiana Hotels 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 Impiana Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Impiana Hotels.
Diversification Opportunities for Alliance Financial and Impiana Hotels
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alliance and Impiana is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Impiana Hotels Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impiana Hotels 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 Impiana Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impiana Hotels Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Impiana Hotels go up and down completely randomly.
Pair Corralation between Alliance Financial and Impiana Hotels
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.35 times more return on investment than Impiana Hotels. However, Alliance Financial Group is 2.82 times less risky than Impiana Hotels. It trades about 0.16 of its potential returns per unit of risk. Impiana Hotels Bhd is currently generating about 0.01 per unit of risk. If you would invest 346.00 in Alliance Financial Group on August 27, 2024 and sell it today you would earn a total of 153.00 from holding Alliance Financial Group or generate 44.22% 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. Impiana Hotels Bhd
Performance |
| Timeline |
| Alliance Financial |
| Impiana Hotels Bhd |
Alliance Financial and Impiana Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and Impiana Hotels
The main advantage of trading using opposite Alliance Financial and Impiana Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Impiana Hotels 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 Impiana Hotels will offset losses from the drop in Impiana Hotels' long position.| Alliance Financial vs. Digistar Bhd | Alliance Financial vs. Minetech Resources Bhd | Alliance Financial vs. OpenSys M Bhd | Alliance Financial vs. Insas Bhd |
| Impiana Hotels vs. Digistar Bhd | Impiana Hotels vs. Minetech Resources Bhd | Impiana Hotels vs. OpenSys M Bhd | Impiana Hotels vs. Insas 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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