Correlation Between Allient and BAIYU Holdings

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

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

Diversification Opportunities for Allient and BAIYU Holdings

0.13

Correlation Coefficient

Allient  BAIYU Holdings

Average diversification

The 3 months correlation between Allient and BAIYU is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Allient and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and Allient 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 Allient are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of Allient i.e., Allient and BAIYU Holdings go up and down completely randomly.

Pair Corralation between Allient and BAIYU Holdings

Given the investment horizon of 90 days Allient is expected to generate 0.32 times more return on investment than BAIYU Holdings. However, Allient is 3.16 times less risky than BAIYU Holdings. It trades about -0.01 of its potential returns per unit of risk. BAIYU Holdings is currently generating about -0.08 per unit of risk. If you would invest  3,997  in Allient on October 26, 2024 and sell it today you would lose (1,335) from holding Allient or give up 33.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.7%
Values	Daily Returns

Allient  vs.  BAIYU Holdings

Allient

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Allient and BAIYU Holdings

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

The idea behind Allient and BAIYU Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.