Correlation Between Flexible Solutions and ALK Abell
Can any of the company-specific risk be diversified away by investing in both Flexible Solutions and ALK Abell 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 Flexible Solutions and ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flexible Solutions International and ALK Abell AS, you can compare the effects of market volatilities on Flexible Solutions and ALK Abell 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 Flexible Solutions with a short position of ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and ALK Abell.
Diversification Opportunities for Flexible Solutions and ALK Abell
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flexible and ALK is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Flexible Solutions Internation and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS and Flexible Solutions 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 Flexible Solutions International are associated (or correlated) with ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Flexible Solutions i.e., Flexible Solutions and ALK Abell go up and down completely randomly.
Pair Corralation between Flexible Solutions and ALK Abell
Considering the 90-day investment horizon Flexible Solutions International is expected to generate 3.0 times more return on investment than ALK Abell. However, Flexible Solutions is 3.0 times more volatile than ALK Abell AS. It trades about -0.03 of its potential returns per unit of risk. ALK Abell AS is currently generating about -0.21 per unit of risk. If you would invest 383.00 in Flexible Solutions International on September 22, 2024 and sell it today you would lose (28.00) from holding Flexible Solutions International or give up 7.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Flexible Solutions Internation vs. ALK Abell AS
Performance |
| Timeline |
| Flexible Solutions |
| ALK Abell AS |
Flexible Solutions and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flexible Solutions and ALK Abell
The main advantage of trading using opposite Flexible Solutions and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flexible Solutions position performs unexpectedly, ALK Abell 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 ALK Abell will offset losses from the drop in ALK Abell's long position.| Flexible Solutions vs. LyondellBasell Industries NV | Flexible Solutions vs. Cabot | Flexible Solutions vs. Westlake Chemical | Flexible Solutions vs. Air Products and |
| ALK Abell vs. MACOM Technology Solutions | ALK Abell vs. Flexible Solutions International | ALK Abell vs. CF Industries Holdings | ALK Abell vs. IPG Photonics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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