Correlation Between ALi Corp and LIWANLI Innovation

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

By analyzing existing cross correlation between ALi Corp and LIWANLI Innovation Co, you can compare the effects of market volatilities on ALi Corp and LIWANLI Innovation 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 ALi Corp with a short position of LIWANLI Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALi Corp and LIWANLI Innovation.

Diversification Opportunities for ALi Corp and LIWANLI Innovation

0.45

Correlation Coefficient

ALi Corp  LIWANLI Innovation

Very weak diversification

The 3 months correlation between ALi and LIWANLI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding ALi Corp and LIWANLI Innovation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIWANLI Innovation and ALi Corp 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 ALi Corp are associated (or correlated) with LIWANLI Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIWANLI Innovation has no effect on the direction of ALi Corp i.e., ALi Corp and LIWANLI Innovation go up and down completely randomly.

Pair Corralation between ALi Corp and LIWANLI Innovation

Assuming the 90 days trading horizon ALi Corp is expected to generate 7.81 times more return on investment than LIWANLI Innovation. However, ALi Corp is 7.81 times more volatile than LIWANLI Innovation Co. It trades about 0.14 of its potential returns per unit of risk. LIWANLI Innovation Co is currently generating about 0.12 per unit of risk. If you would invest  2,090  in ALi Corp on October 10, 2024 and sell it today you would earn a total of  1,810  from holding ALi Corp or generate 86.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

ALi Corp  vs.  LIWANLI Innovation Co

ALi Corp

Risk-Adjusted Performance

11 of 100

Good

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

LIWANLI Innovation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIWANLI Innovation Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LIWANLI Innovation may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALi Corp and LIWANLI Innovation

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

The idea behind ALi Corp and LIWANLI Innovation Co 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 Stocks Directory module to find actively traded stocks across global markets.