Correlation Between Alliance Financial and Inix Technologies

Can any of the company-specific risk be diversified away by investing in both Alliance Financial and Inix Technologies 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 Inix Technologies 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 Inix Technologies Holdings, you can compare the effects of market volatilities on Alliance Financial and Inix Technologies 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 Inix Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Inix Technologies.

Diversification Opportunities for Alliance Financial and Inix Technologies

-0.37

Correlation Coefficient

Alliance Financial  Inix Technologies

Very good diversification

The 3 months correlation between Alliance and Inix is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Inix Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inix Technologies 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 Inix Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inix Technologies has no effect on the direction of Alliance Financial i.e., Alliance Financial and Inix Technologies go up and down completely randomly.

Pair Corralation between Alliance Financial and Inix Technologies

Assuming the 90 days trading horizon Alliance Financial is expected to generate 10.87 times less return on investment than Inix Technologies. But when comparing it to its historical volatility, Alliance Financial Group is 18.74 times less risky than Inix Technologies. It trades about 0.13 of its potential returns per unit of risk. Inix Technologies Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Inix Technologies Holdings on September 17, 2024 and sell it today you would lose (1.00) from holding Inix Technologies Holdings or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alliance Financial Group  vs.  Inix Technologies Holdings

Alliance Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Alliance Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Inix Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inix Technologies Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Inix Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Financial and Inix Technologies

The main advantage of trading using opposite Alliance Financial and Inix Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Financial position performs unexpectedly, Inix Technologies 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 Inix Technologies will offset losses from the drop in Inix Technologies' long position.

The idea behind Alliance Financial Group and Inix Technologies Holdings 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.