Correlation Between Able View and Alliance Entertainment

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

By analyzing existing cross correlation between Able View Global and Alliance Entertainment Holding, you can compare the effects of market volatilities on Able View and Alliance Entertainment 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 Able View with a short position of Alliance Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Able View and Alliance Entertainment.

Diversification Opportunities for Able View and Alliance Entertainment

0.07

Correlation Coefficient

Able View  Alliance Entertainment

Significant diversification

The 3 months correlation between Able and Alliance is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Able View Global and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment and Able View 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 Able View Global are associated (or correlated) with Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Able View i.e., Able View and Alliance Entertainment go up and down completely randomly.

Pair Corralation between Able View and Alliance Entertainment

Given the investment horizon of 90 days Able View is expected to generate 1.19 times less return on investment than Alliance Entertainment. But when comparing it to its historical volatility, Able View Global is 1.03 times less risky than Alliance Entertainment. It trades about 0.09 of its potential returns per unit of risk. Alliance Entertainment Holding is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Alliance Entertainment Holding on December 19, 2024 and sell it today you would earn a total of  4.00  from holding Alliance Entertainment Holding or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Able View Global  vs.  Alliance Entertainment Holding

Able View Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Able View Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Able View showed solid returns over the last few months and may actually be approaching a breakup point.

Alliance Entertainment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Alliance Entertainment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Able View and Alliance Entertainment

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

The idea behind Able View Global and Alliance Entertainment Holding 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.