Correlation Between Alliance Creative and Crown Holdings

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

By analyzing existing cross correlation between Alliance Creative Gr and Crown Holdings, you can compare the effects of market volatilities on Alliance Creative and Crown Holdings 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 Alliance Creative with a short position of Crown Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Creative and Crown Holdings.

Diversification Opportunities for Alliance Creative and Crown Holdings

0.42

Correlation Coefficient

Alliance Creative  Crown Holdings

Very weak diversification

The 3 months correlation between Alliance and Crown is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Creative Gr and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Alliance Creative 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 Alliance Creative Gr are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Alliance Creative i.e., Alliance Creative and Crown Holdings go up and down completely randomly.

Pair Corralation between Alliance Creative and Crown Holdings

Given the investment horizon of 90 days Alliance Creative Gr is expected to generate 8.07 times more return on investment than Crown Holdings. However, Alliance Creative is 8.07 times more volatile than Crown Holdings. It trades about 0.05 of its potential returns per unit of risk. Crown Holdings is currently generating about 0.01 per unit of risk. If you would invest  16.00  in Alliance Creative Gr on October 3, 2024 and sell it today you would lose (9.20) from holding Alliance Creative Gr or give up 57.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Alliance Creative Gr  vs.  Crown Holdings

Alliance Creative

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Creative Gr are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Alliance Creative showed solid returns over the last few months and may actually be approaching a breakup point.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Alliance Creative and Crown Holdings

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

The idea behind Alliance Creative Gr and Crown Holdings 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.

Check out your portfolio center.

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.