Correlation Between Alliance Select and Bright Kindle
Can any of the company-specific risk be diversified away by investing in both Alliance Select and Bright Kindle 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 Select and Bright Kindle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Select Foods and Bright Kindle Resources, you can compare the effects of market volatilities on Alliance Select and Bright Kindle 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 Select with a short position of Bright Kindle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Select and Bright Kindle.
Diversification Opportunities for Alliance Select and Bright Kindle
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alliance and Bright is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods and Bright Kindle Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Kindle Resources and Alliance Select 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 Select Foods are associated (or correlated) with Bright Kindle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Kindle Resources has no effect on the direction of Alliance Select i.e., Alliance Select and Bright Kindle go up and down completely randomly.
Pair Corralation between Alliance Select and Bright Kindle
Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 0.9 times more return on investment than Bright Kindle. However, Alliance Select Foods is 1.11 times less risky than Bright Kindle. It trades about -0.07 of its potential returns per unit of risk. Bright Kindle Resources is currently generating about -0.23 per unit of risk. If you would invest 39.00 in Alliance Select Foods on September 1, 2024 and sell it today you would lose (1.00) from holding Alliance Select Foods or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.67% |
| Values | Daily Returns |
Alliance Select Foods vs. Bright Kindle Resources
Performance |
| Timeline |
| Alliance Select Foods |
| Bright Kindle Resources |
Alliance Select and Bright Kindle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Select and Bright Kindle
The main advantage of trading using opposite Alliance Select and Bright Kindle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Select position performs unexpectedly, Bright Kindle 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 Bright Kindle will offset losses from the drop in Bright Kindle's long position.The idea behind Alliance Select Foods and Bright Kindle Resources 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.| Bright Kindle vs. Allhome Corp | Bright Kindle vs. LFM Properties Corp | Bright Kindle vs. Altus Property Ventures | Bright Kindle vs. Monde Nissin Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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