Correlation Between Alan Allman and Broadpeak

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

By analyzing existing cross correlation between Alan Allman Associates and Broadpeak SA, you can compare the effects of market volatilities on Alan Allman and Broadpeak 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 Alan Allman with a short position of Broadpeak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alan Allman and Broadpeak.

Diversification Opportunities for Alan Allman and Broadpeak

0.09

Correlation Coefficient

Alan Allman  Broadpeak

Significant diversification

The 3 months correlation between Alan and Broadpeak is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alan Allman Associates and Broadpeak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadpeak SA and Alan Allman 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 Alan Allman Associates are associated (or correlated) with Broadpeak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadpeak SA has no effect on the direction of Alan Allman i.e., Alan Allman and Broadpeak go up and down completely randomly.

Pair Corralation between Alan Allman and Broadpeak

Assuming the 90 days trading horizon Alan Allman Associates is expected to generate 2.46 times more return on investment than Broadpeak. However, Alan Allman is 2.46 times more volatile than Broadpeak SA. It trades about 0.05 of its potential returns per unit of risk. Broadpeak SA is currently generating about -0.16 per unit of risk. If you would invest  560.00  in Alan Allman Associates on October 24, 2024 and sell it today you would earn a total of  65.00  from holding Alan Allman Associates or generate 11.61% return on investment over 90 days.

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

Alan Allman Associates  vs.  Broadpeak SA

Alan Allman Associates

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alan Allman Associates are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alan Allman sustained solid returns over the last few months and may actually be approaching a breakup point.

Broadpeak SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Alan Allman and Broadpeak

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

The idea behind Alan Allman Associates and Broadpeak SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.