Correlation Between E M and Alliance Finance
Specify exactly 2 symbols:
By analyzing existing cross correlation between E M L and Alliance Finance, you can compare the effects of market volatilities on E M and Alliance Finance 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 E M with a short position of Alliance Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of E M and Alliance Finance.
Diversification Opportunities for E M and Alliance Finance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EMLN0000 and Alliance is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding E M L and Alliance Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Finance and E M 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 E M L are associated (or correlated) with Alliance Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Finance has no effect on the direction of E M i.e., E M and Alliance Finance go up and down completely randomly.
Pair Corralation between E M and Alliance Finance
Assuming the 90 days trading horizon E M is expected to generate 69.21 times less return on investment than Alliance Finance. In addition to that, E M is 1.4 times more volatile than Alliance Finance. It trades about 0.0 of its total potential returns per unit of risk. Alliance Finance is currently generating about 0.09 per unit of volatility. If you would invest 5,820 in Alliance Finance on August 27, 2024 and sell it today you would earn a total of 6,680 from holding Alliance Finance or generate 114.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E M L vs. Alliance Finance
Performance |
| Timeline |
| E M L |
| Alliance Finance |
E M and Alliance Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E M and Alliance Finance
The main advantage of trading using opposite E M and Alliance Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E M position performs unexpectedly, Alliance Finance 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 Finance will offset losses from the drop in Alliance Finance's long position.The idea behind E M L and Alliance Finance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Alliance Finance vs. RENUKA FOODS PLC | Alliance Finance vs. Ceylon Hotels | Alliance Finance vs. Distilleries Company of | Alliance Finance vs. Lanka Realty Investments |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |