Correlation Between Alliance Financial and Dufu Tech

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

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

Diversification Opportunities for Alliance Financial and Dufu Tech

0.1

Correlation Coefficient

Alliance Financial  Dufu Tech

Average diversification

The 3 months correlation between Alliance and Dufu is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Dufu Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dufu Tech Corp and Alliance Financial 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 Alliance Financial Group are associated (or correlated) with Dufu Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dufu Tech Corp has no effect on the direction of Alliance Financial i.e., Alliance Financial and Dufu Tech go up and down completely randomly.

Pair Corralation between Alliance Financial and Dufu Tech

Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.62 times more return on investment than Dufu Tech. However, Alliance Financial Group is 1.61 times less risky than Dufu Tech. It trades about -0.05 of its potential returns per unit of risk. Dufu Tech Corp is currently generating about -0.35 per unit of risk. If you would invest  488.00  in Alliance Financial Group on December 29, 2024 and sell it today you would lose (26.00) from holding Alliance Financial Group or give up 5.33% of portfolio value over 90 days.

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

Alliance Financial Group  vs.  Dufu Tech Corp

Alliance Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Dufu Tech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dufu Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alliance Financial and Dufu Tech

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

The idea behind Alliance Financial Group and Dufu Tech Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.