Correlation Between Aldel Financial and Allient

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

By analyzing existing cross correlation between Aldel Financial II and Allient, you can compare the effects of market volatilities on Aldel Financial and Allient 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 Aldel Financial with a short position of Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Allient.

Diversification Opportunities for Aldel Financial and Allient

-0.27

Correlation Coefficient

Aldel Financial  Allient

Very good diversification

The 3 months correlation between Aldel and Allient is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Aldel Financial 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 Aldel Financial II are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Aldel Financial i.e., Aldel Financial and Allient go up and down completely randomly.

Pair Corralation between Aldel Financial and Allient

Given the investment horizon of 90 days Aldel Financial II is expected to generate 0.04 times more return on investment than Allient. However, Aldel Financial II is 26.5 times less risky than Allient. It trades about 0.2 of its potential returns per unit of risk. Allient is currently generating about -0.02 per unit of risk. If you would invest  990.00  in Aldel Financial II on October 22, 2024 and sell it today you would earn a total of  5.00  from holding Aldel Financial II or generate 0.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.84%
Values	Daily Returns

Aldel Financial II  vs.  Allient

Aldel Financial II

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Aldel Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Allient

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aldel Financial and Allient

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

The idea behind Aldel Financial II and Allient 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.