Correlation Between Allied Electronics and Alexander Forbes
Can any of the company-specific risk be diversified away by investing in both Allied Electronics and Alexander Forbes 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 Allied Electronics and Alexander Forbes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Electronics and Alexander Forbes Grp, you can compare the effects of market volatilities on Allied Electronics and Alexander Forbes 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 Allied Electronics with a short position of Alexander Forbes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Electronics and Alexander Forbes.
Diversification Opportunities for Allied Electronics and Alexander Forbes
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allied and Alexander is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Allied Electronics and Alexander Forbes Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Forbes Grp and Allied Electronics 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 Allied Electronics are associated (or correlated) with Alexander Forbes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Forbes Grp has no effect on the direction of Allied Electronics i.e., Allied Electronics and Alexander Forbes go up and down completely randomly.
Pair Corralation between Allied Electronics and Alexander Forbes
Assuming the 90 days trading horizon Allied Electronics is expected to generate 0.7 times more return on investment than Alexander Forbes. However, Allied Electronics is 1.43 times less risky than Alexander Forbes. It trades about 0.08 of its potential returns per unit of risk. Alexander Forbes Grp is currently generating about 0.05 per unit of risk. If you would invest 89,976 in Allied Electronics on September 23, 2024 and sell it today you would earn a total of 123,024 from holding Allied Electronics or generate 136.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Allied Electronics vs. Alexander Forbes Grp
Performance |
Timeline |
Allied Electronics |
Alexander Forbes Grp |
Allied Electronics and Alexander Forbes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allied Electronics and Alexander Forbes
The main advantage of trading using opposite Allied Electronics and Alexander Forbes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Electronics position performs unexpectedly, Alexander Forbes 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 Alexander Forbes will offset losses from the drop in Alexander Forbes' long position.Allied Electronics vs. Ayo Technology Solutions | Allied Electronics vs. Alexander Forbes Grp | Allied Electronics vs. Brait SE | Allied Electronics vs. Discovery Holdings |
Alexander Forbes vs. Sygnia | Alexander Forbes vs. Advtech | Alexander Forbes vs. Discovery Holdings | Alexander Forbes vs. Dipula Income |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |