Correlation Between DC HEALTHCARE and Alliance Financial

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

By analyzing existing cross correlation between DC HEALTHCARE HOLDINGS and Alliance Financial Group, you can compare the effects of market volatilities on DC HEALTHCARE and Alliance Financial 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 DC HEALTHCARE with a short position of Alliance Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of DC HEALTHCARE and Alliance Financial.

Diversification Opportunities for DC HEALTHCARE and Alliance Financial

-0.28

Correlation Coefficient

DC HEALTHCARE  Alliance Financial

Very good diversification

The 3 months correlation between 0283 and Alliance is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding DC HEALTHCARE HOLDINGS and Alliance Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Financial and DC HEALTHCARE 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 DC HEALTHCARE HOLDINGS are associated (or correlated) with Alliance Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Financial has no effect on the direction of DC HEALTHCARE i.e., DC HEALTHCARE and Alliance Financial go up and down completely randomly.

Pair Corralation between DC HEALTHCARE and Alliance Financial

Assuming the 90 days trading horizon DC HEALTHCARE is expected to generate 1.53 times less return on investment than Alliance Financial. In addition to that, DC HEALTHCARE is 2.96 times more volatile than Alliance Financial Group. It trades about 0.02 of its total potential returns per unit of risk. Alliance Financial Group is currently generating about 0.08 per unit of volatility. If you would invest  483.00  in Alliance Financial Group on December 24, 2024 and sell it today you would earn a total of  26.00  from holding Alliance Financial Group or generate 5.38% return on investment over 90 days.

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

DC HEALTHCARE HOLDINGS  vs.  Alliance Financial Group

DC HEALTHCARE HOLDINGS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DC HEALTHCARE HOLDINGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, DC HEALTHCARE is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Alliance Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Alliance Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with DC HEALTHCARE and Alliance Financial

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

The idea behind DC HEALTHCARE HOLDINGS and Alliance Financial Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.