Correlation Between Alphanam and LICOGI 13

Can any of the company-specific risk be diversified away by investing in both Alphanam and LICOGI 13 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 Alphanam and LICOGI 13 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphanam ME and LICOGI 13, you can compare the effects of market volatilities on Alphanam and LICOGI 13 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 Alphanam with a short position of LICOGI 13. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and LICOGI 13.

Diversification Opportunities for Alphanam and LICOGI 13

0.82

Correlation Coefficient

Alphanam  LICOGI 13

Very poor diversification

The 3 months correlation between Alphanam and LICOGI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and LICOGI 13 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LICOGI 13 and Alphanam 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 Alphanam ME are associated (or correlated) with LICOGI 13. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LICOGI 13 has no effect on the direction of Alphanam i.e., Alphanam and LICOGI 13 go up and down completely randomly.

Pair Corralation between Alphanam and LICOGI 13

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the LICOGI 13. In addition to that, Alphanam is 1.18 times more volatile than LICOGI 13. It trades about -0.14 of its total potential returns per unit of risk. LICOGI 13 is currently generating about -0.05 per unit of volatility. If you would invest  320,000  in LICOGI 13 on September 28, 2024 and sell it today you would lose (30,000) from holding LICOGI 13 or give up 9.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	57.81%
Values	Daily Returns

Alphanam ME  vs.  LICOGI 13

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LICOGI 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LICOGI 13 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Alphanam and LICOGI 13

The main advantage of trading using opposite Alphanam and LICOGI 13 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam position performs unexpectedly, LICOGI 13 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 LICOGI 13 will offset losses from the drop in LICOGI 13's long position.

The idea behind Alphanam ME and LICOGI 13 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..