Correlation Between Alliance Financial and Sapura Industrial
Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Sapura Industrial 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 Sapura Industrial 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 Sapura Industrial Bhd, you can compare the effects of market volatilities on Alliance Financial and Sapura Industrial 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 Sapura Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Sapura Industrial.
Diversification Opportunities for Alliance Financial and Sapura Industrial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliance and Sapura is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Sapura Industrial go up and down completely randomly.
Pair Corralation between Alliance Financial and Sapura Industrial
Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.71 times more return on investment than Sapura Industrial. However, Alliance Financial Group is 1.4 times less risky than Sapura Industrial. It trades about 0.21 of its potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.04 per unit of risk. If you would invest 488.00 in Alliance Financial Group on November 3, 2024 and sell it today you would earn a total of 32.00 from holding Alliance Financial Group or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Alliance Financial Group vs. Sapura Industrial Bhd
Performance |
| Timeline |
| Alliance Financial |
| Sapura Industrial Bhd |
Alliance Financial and Sapura Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Financial and Sapura Industrial
The main advantage of trading using opposite Alliance Financial and Sapura Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Sapura Industrial 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 Sapura Industrial will offset losses from the drop in Sapura Industrial's long position.| Alliance Financial vs. Senheng New Retail | Alliance Financial vs. CB Industrial Product | Alliance Financial vs. Awanbiru Technology Bhd | Alliance Financial vs. Tex Cycle Technology |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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