Correlation Between Alight and AMSWA Old

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

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

Diversification Opportunities for Alight and AMSWA Old

-0.02

Correlation Coefficient

Alight  AMSWA Old

Good diversification

The 3 months correlation between Alight and AMSWA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alight Inc and AMSWA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMSWA Old and Alight 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 Alight Inc are associated (or correlated) with AMSWA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMSWA Old has no effect on the direction of Alight i.e., Alight and AMSWA Old go up and down completely randomly.

Pair Corralation between Alight and AMSWA Old

Given the investment horizon of 90 days Alight Inc is expected to under-perform the AMSWA Old. But the stock apears to be less risky and, when comparing its historical volatility, Alight Inc is 1.01 times less risky than AMSWA Old. The stock trades about -0.02 of its potential returns per unit of risk. The AMSWA Old is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,356  in AMSWA Old on October 11, 2024 and sell it today you would lose (279.00) from holding AMSWA Old or give up 20.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.49%
Values	Daily Returns

Alight Inc  vs.  AMSWA Old

Alight Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alight Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Alight is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AMSWA Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMSWA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMSWA Old is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alight and AMSWA Old

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

The idea behind Alight Inc and AMSWA Old 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.