Correlation Between Allis Electric and Voltronic Power

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

By analyzing existing cross correlation between Allis Electric Co and Voltronic Power Technology, you can compare the effects of market volatilities on Allis Electric and Voltronic Power 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 Allis Electric with a short position of Voltronic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allis Electric and Voltronic Power.

Diversification Opportunities for Allis Electric and Voltronic Power

0.72

Correlation Coefficient

Allis Electric  Voltronic Power

Poor diversification

The 3 months correlation between Allis and Voltronic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Allis Electric Co and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech and Allis Electric 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 Allis Electric Co are associated (or correlated) with Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Allis Electric i.e., Allis Electric and Voltronic Power go up and down completely randomly.

Pair Corralation between Allis Electric and Voltronic Power

Assuming the 90 days trading horizon Allis Electric Co is expected to generate 1.26 times more return on investment than Voltronic Power. However, Allis Electric is 1.26 times more volatile than Voltronic Power Technology. It trades about 0.09 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about 0.03 per unit of risk. If you would invest  3,050  in Allis Electric Co on September 23, 2024 and sell it today you would earn a total of  6,920  from holding Allis Electric Co or generate 226.89% return on investment over 90 days.

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

Allis Electric Co  vs.  Voltronic Power Technology

Allis Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allis Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Allis Electric and Voltronic Power

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

The idea behind Allis Electric Co and Voltronic Power Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.