Correlation Between Ally Leasehold and Sena Development

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

By analyzing existing cross correlation between Ally Leasehold Real and Sena Development Public, you can compare the effects of market volatilities on Ally Leasehold and Sena Development 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 Ally Leasehold with a short position of Sena Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ally Leasehold and Sena Development.

Diversification Opportunities for Ally Leasehold and Sena Development

-0.2

Correlation Coefficient

Ally Leasehold  Sena Development

Good diversification

The 3 months correlation between Ally and Sena is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ally Leasehold Real and Sena Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sena Development Public and Ally Leasehold 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 Ally Leasehold Real are associated (or correlated) with Sena Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sena Development Public has no effect on the direction of Ally Leasehold i.e., Ally Leasehold and Sena Development go up and down completely randomly.

Pair Corralation between Ally Leasehold and Sena Development

Assuming the 90 days trading horizon Ally Leasehold Real is expected to generate 1.62 times more return on investment than Sena Development. However, Ally Leasehold is 1.62 times more volatile than Sena Development Public. It trades about 0.16 of its potential returns per unit of risk. Sena Development Public is currently generating about -0.13 per unit of risk. If you would invest  474.00  in Ally Leasehold Real on September 17, 2024 and sell it today you would earn a total of  71.00  from holding Ally Leasehold Real or generate 14.98% return on investment over 90 days.

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

Ally Leasehold Real  vs.  Sena Development Public

Ally Leasehold Real

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Leasehold Real are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Ally Leasehold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sena Development Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sena Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Ally Leasehold and Sena Development

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

The idea behind Ally Leasehold Real and Sena Development Public 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.