Correlation Between Allient and Futuretech

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

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

Diversification Opportunities for Allient and Futuretech

0.04

Correlation Coefficient

Allient  Futuretech

Significant diversification

The 3 months correlation between Allient and Futuretech is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Futuretech II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuretech II Acquisition 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 Futuretech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuretech II Acquisition has no effect on the direction of Allient i.e., Allient and Futuretech go up and down completely randomly.

Pair Corralation between Allient and Futuretech

Given the investment horizon of 90 days Allient is expected to generate 2.15 times less return on investment than Futuretech. In addition to that, Allient is 1.16 times more volatile than Futuretech II Acquisition. It trades about 0.02 of its total potential returns per unit of risk. Futuretech II Acquisition is currently generating about 0.05 per unit of volatility. If you would invest  1,125  in Futuretech II Acquisition on December 21, 2024 and sell it today you would earn a total of  53.00  from holding Futuretech II Acquisition or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.67%
Values	Daily Returns

Allient  vs.  Futuretech II Acquisition

Allient

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Allient is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Futuretech II Acquisition

Risk-Adjusted Performance

Insignificant

Over the last 90 days Futuretech II Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unsteady forward indicators, Futuretech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Allient and Futuretech

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

The idea behind Allient and Futuretech II Acquisition 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.