Correlation Between Allient and Launch One

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

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

Diversification Opportunities for Allient and Launch One

-0.7

Correlation Coefficient

Allient  Launch One

Excellent diversification

The 3 months correlation between Allient and Launch is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One 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 Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of Allient i.e., Allient and Launch One go up and down completely randomly.

Pair Corralation between Allient and Launch One

Given the investment horizon of 90 days Allient is expected to under-perform the Launch One. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 9.3 times less risky than Launch One. The stock trades about -0.15 of its potential returns per unit of risk. The Launch One Acquisition is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Launch One Acquisition on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Launch One Acquisition or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Allient  vs.  Launch One Acquisition

Allient

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Launch One

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

The idea behind Allient and Launch One 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.