Correlation Between RELO GROUP and ALERION CLEANPOWER

Can any of the company-specific risk be diversified away by investing in both RELO GROUP and ALERION CLEANPOWER 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 RELO GROUP and ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RELO GROUP INC and ALERION CLEANPOWER, you can compare the effects of market volatilities on RELO GROUP and ALERION CLEANPOWER 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 RELO GROUP with a short position of ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELO GROUP and ALERION CLEANPOWER.

Diversification Opportunities for RELO GROUP and ALERION CLEANPOWER

0.28

Correlation Coefficient

RELO GROUP  ALERION CLEANPOWER

Modest diversification

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

Pair Corralation between RELO GROUP and ALERION CLEANPOWER

Assuming the 90 days horizon RELO GROUP is expected to generate 1.15 times less return on investment than ALERION CLEANPOWER. But when comparing it to its historical volatility, RELO GROUP INC is 1.09 times less risky than ALERION CLEANPOWER. It trades about 0.07 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,520  in ALERION CLEANPOWER on October 7, 2024 and sell it today you would earn a total of  110.00  from holding ALERION CLEANPOWER or generate 7.24% return on investment over 90 days.

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

RELO GROUP INC  vs.  ALERION CLEANPOWER

RELO GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RELO GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RELO GROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ALERION CLEANPOWER

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALERION CLEANPOWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RELO GROUP and ALERION CLEANPOWER

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

The idea behind RELO GROUP INC and ALERION CLEANPOWER 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.