Correlation Between Alliance Global and Alaska Power
Can any of the company-specific risk be diversified away by investing in both Alliance Global and Alaska Power 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 Global and Alaska Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Global Group and Alaska Power Telephone, you can compare the effects of market volatilities on Alliance Global and Alaska Power 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 Global with a short position of Alaska Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Global and Alaska Power.
Diversification Opportunities for Alliance Global and Alaska Power
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alliance and Alaska is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Global Group and Alaska Power Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Power Telephone and Alliance Global 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 Global Group are associated (or correlated) with Alaska Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Power Telephone has no effect on the direction of Alliance Global i.e., Alliance Global and Alaska Power go up and down completely randomly.
Pair Corralation between Alliance Global and Alaska Power
Assuming the 90 days horizon Alliance Global Group is expected to under-perform the Alaska Power. In addition to that, Alliance Global is 2.12 times more volatile than Alaska Power Telephone. It trades about -0.03 of its total potential returns per unit of risk. Alaska Power Telephone is currently generating about 0.04 per unit of volatility. If you would invest 5,485 in Alaska Power Telephone on September 2, 2024 and sell it today you would earn a total of 65.00 from holding Alaska Power Telephone or generate 1.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Alliance Global Group vs. Alaska Power Telephone
Performance |
Timeline |
Alliance Global Group |
Alaska Power Telephone |
Alliance Global and Alaska Power Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alliance Global and Alaska Power
The main advantage of trading using opposite Alliance Global and Alaska Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Global position performs unexpectedly, Alaska Power 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 Alaska Power will offset losses from the drop in Alaska Power's long position.Alliance Global vs. Alliance Recovery | Alliance Global vs. Ayala | Alliance Global vs. Alaska Power Telephone | Alliance Global vs. RCABS Inc |
Alaska Power vs. Alliance Recovery | Alaska Power vs. Ayala | Alaska Power vs. Alliance Global Group | Alaska Power vs. RCABS Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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