Correlation Between ALFORMER Industrial and International Games

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

By analyzing existing cross correlation between ALFORMER Industrial Co and International Games System, you can compare the effects of market volatilities on ALFORMER Industrial and International Games 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 ALFORMER Industrial with a short position of International Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALFORMER Industrial and International Games.

Diversification Opportunities for ALFORMER Industrial and International Games

0.36

Correlation Coefficient

ALFORMER Industrial  International Games

Weak diversification

The 3 months correlation between ALFORMER and International is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ALFORMER Industrial Co and International Games System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Games and ALFORMER Industrial 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 ALFORMER Industrial Co are associated (or correlated) with International Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Games has no effect on the direction of ALFORMER Industrial i.e., ALFORMER Industrial and International Games go up and down completely randomly.

Pair Corralation between ALFORMER Industrial and International Games

Assuming the 90 days trading horizon ALFORMER Industrial Co is expected to under-perform the International Games. In addition to that, ALFORMER Industrial is 1.49 times more volatile than International Games System. It trades about -0.08 of its total potential returns per unit of risk. International Games System is currently generating about 0.01 per unit of volatility. If you would invest  98,400  in International Games System on December 2, 2024 and sell it today you would lose (200.00) from holding International Games System or give up 0.2% of portfolio value over 90 days.

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

ALFORMER Industrial Co  vs.  International Games System

ALFORMER Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALFORMER Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

International Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Games System has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, International Games is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ALFORMER Industrial and International Games

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

The idea behind ALFORMER Industrial Co and International Games System 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.