Correlation Between Alan Allman and MRM SA

Can any of the company-specific risk be diversified away by investing in both Alan Allman and MRM SA 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 MRM SA 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 MRM SA, you can compare the effects of market volatilities on Alan Allman and MRM SA 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 MRM SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alan Allman and MRM SA.

Diversification Opportunities for Alan Allman and MRM SA

-0.37

Correlation Coefficient

Alan Allman  MRM SA

Very good diversification

The 3 months correlation between Alan and MRM is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alan Allman Associates and MRM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRM 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 MRM SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRM SA has no effect on the direction of Alan Allman i.e., Alan Allman and MRM SA go up and down completely randomly.

Pair Corralation between Alan Allman and MRM SA

If you would invest  340.00  in Alan Allman Associates on October 3, 2024 and sell it today you would earn a total of  160.00  from holding Alan Allman Associates or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Alan Allman Associates  vs.  MRM SA

Alan Allman Associates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alan Allman Associates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alan Allman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

MRM SA

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days MRM SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, MRM SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alan Allman and MRM SA

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

The idea behind Alan Allman Associates and MRM 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.