Correlation Between Alligo AB and Indutrade

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

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

Diversification Opportunities for Alligo AB and Indutrade

0.78

Correlation Coefficient

Alligo AB  Indutrade

Poor diversification

The 3 months correlation between Alligo and Indutrade is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alligo AB Series and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Alligo AB 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 Alligo AB Series are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Alligo AB i.e., Alligo AB and Indutrade go up and down completely randomly.

Pair Corralation between Alligo AB and Indutrade

Assuming the 90 days trading horizon Alligo AB Series is expected to under-perform the Indutrade. In addition to that, Alligo AB is 1.8 times more volatile than Indutrade AB. It trades about -0.09 of its total potential returns per unit of risk. Indutrade AB is currently generating about -0.16 per unit of volatility. If you would invest  32,200  in Indutrade AB on September 2, 2024 and sell it today you would lose (4,360) from holding Indutrade AB or give up 13.54% of portfolio value over 90 days.

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

Alligo AB Series  vs.  Indutrade AB

Alligo AB Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alligo AB Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Indutrade AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indutrade AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Alligo AB and Indutrade

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

The idea behind Alligo AB Series and Indutrade AB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.