Correlation Between Alliance Entertainment and Genfit

Can any of the company-specific risk be diversified away by investing in both Alliance Entertainment and Genfit 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 Entertainment and Genfit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alliance Entertainment Holding and Genfit, you can compare the effects of market volatilities on Alliance Entertainment and Genfit 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 Entertainment with a short position of Genfit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Entertainment and Genfit.

Diversification Opportunities for Alliance Entertainment and Genfit

-0.27

Correlation Coefficient

Alliance Entertainment  Genfit

Very good diversification

The 3 months correlation between Alliance and Genfit is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Entertainment Holding and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and Alliance Entertainment 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 Entertainment Holding are associated (or correlated) with Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of Alliance Entertainment i.e., Alliance Entertainment and Genfit go up and down completely randomly.

Pair Corralation between Alliance Entertainment and Genfit

Given the investment horizon of 90 days Alliance Entertainment Holding is expected to generate 1.9 times more return on investment than Genfit. However, Alliance Entertainment is 1.9 times more volatile than Genfit. It trades about 0.1 of its potential returns per unit of risk. Genfit is currently generating about 0.01 per unit of risk. If you would invest  369.00  in Alliance Entertainment Holding on September 12, 2024 and sell it today you would earn a total of  284.00  from holding Alliance Entertainment Holding or generate 76.96% return on investment over 90 days.

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

Alliance Entertainment Holding  vs.  Genfit

Alliance Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alliance Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genfit

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alliance Entertainment and Genfit

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

The idea behind Alliance Entertainment Holding and Genfit 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.