Correlation Between Alliance Global and Protect Pharmaceutical

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

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

Diversification Opportunities for Alliance Global and Protect Pharmaceutical

-0.86

Correlation Coefficient

Alliance Global  Protect Pharmaceutical

Pay attention - limited upside

The 3 months correlation between Alliance and Protect is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Global Group and Protect Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protect Pharmaceutical and Alliance Global 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 Global Group are associated (or correlated) with Protect Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protect Pharmaceutical has no effect on the direction of Alliance Global i.e., Alliance Global and Protect Pharmaceutical go up and down completely randomly.

Pair Corralation between Alliance Global and Protect Pharmaceutical

Assuming the 90 days horizon Alliance Global Group is expected to under-perform the Protect Pharmaceutical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Alliance Global Group is 1.97 times less risky than Protect Pharmaceutical. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Protect Pharmaceutical is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Protect Pharmaceutical on December 29, 2024 and sell it today you would earn a total of  99.00  from holding Protect Pharmaceutical or generate 190.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alliance Global Group  vs.  Protect Pharmaceutical

Alliance Global Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Protect Pharmaceutical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Protect Pharmaceutical are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Protect Pharmaceutical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Global and Protect Pharmaceutical

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

The idea behind Alliance Global Group and Protect Pharmaceutical 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 Transaction History module to view history of all your transactions and understand their impact on performance.