Correlation Between Alliance Global and Steel Partners
Can any of the company-specific risk be diversified away by investing in both Alliance Global and Steel Partners 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 Global and Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Global Group and Steel Partners Holdings, you can compare the effects of market volatilities on Alliance Global and Steel Partners 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 Global with a short position of Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Global and Steel Partners.
Diversification Opportunities for Alliance Global and Steel Partners
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Alliance and Steel is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Global Group and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings and Alliance Global 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 Global Group are associated (or correlated) with Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of Alliance Global i.e., Alliance Global and Steel Partners go up and down completely randomly.
Pair Corralation between Alliance Global and Steel Partners
Assuming the 90 days horizon Alliance Global Group is expected to under-perform the Steel Partners. But the pink sheet apears to be less risky and, when comparing its historical volatility, Alliance Global Group is 1.26 times less risky than Steel Partners. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Steel Partners Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,890 in Steel Partners Holdings on August 27, 2024 and sell it today you would earn a total of 215.00 from holding Steel Partners Holdings or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Alliance Global Group vs. Steel Partners Holdings
Performance |
| Timeline |
| Alliance Global Group |
| Steel Partners Holdings |
Alliance Global and Steel Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Global and Steel Partners
The main advantage of trading using opposite Alliance Global and Steel Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Global position performs unexpectedly, Steel Partners 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 Steel Partners will offset losses from the drop in Steel Partners' long position.| Alliance Global vs. Alliance Recovery | Alliance Global vs. Ayala | Alliance Global vs. Alaska Power Telephone | Alliance Global vs. RCABS Inc |
| Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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