Correlation Between Allient and Relx PLC

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

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

Diversification Opportunities for Allient and Relx PLC

-0.23

Correlation Coefficient

Allient  Relx PLC

Very good diversification

The 3 months correlation between Allient and Relx is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and Allient 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 Allient are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Allient i.e., Allient and Relx PLC go up and down completely randomly.

Pair Corralation between Allient and Relx PLC

Given the investment horizon of 90 days Allient is expected to generate 2.47 times more return on investment than Relx PLC. However, Allient is 2.47 times more volatile than Relx PLC ADR. It trades about 0.15 of its potential returns per unit of risk. Relx PLC ADR is currently generating about -0.01 per unit of risk. If you would invest  2,049  in Allient on September 18, 2024 and sell it today you would earn a total of  535.00  from holding Allient or generate 26.11% return on investment over 90 days.

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

Allient  vs.  Relx PLC ADR

Allient

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Relx PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Relx PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Relx PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allient and Relx PLC

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

The idea behind Allient and Relx PLC ADR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.