Correlation Between ALJ Regional and International Consolidated

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

By analyzing existing cross correlation between ALJ Regional Holdings and International Consolidated Companies, you can compare the effects of market volatilities on ALJ Regional and International Consolidated 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 ALJ Regional with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALJ Regional and International Consolidated.

Diversification Opportunities for ALJ Regional and International Consolidated

-0.36

Correlation Coefficient

ALJ Regional  International Consolidated

Very good diversification

The 3 months correlation between ALJ and International is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ALJ Regional Holdings and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and ALJ Regional 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 ALJ Regional Holdings are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of ALJ Regional i.e., ALJ Regional and International Consolidated go up and down completely randomly.

Pair Corralation between ALJ Regional and International Consolidated

If you would invest  40.00  in International Consolidated Companies on September 5, 2024 and sell it today you would lose (38.99) from holding International Consolidated Companies or give up 97.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

ALJ Regional Holdings  vs.  International Consolidated Com

ALJ Regional Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALJ Regional Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, ALJ Regional is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Consolidated

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALJ Regional and International Consolidated

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

The idea behind ALJ Regional Holdings and International Consolidated Companies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .