Correlation Between Allient and Uber Technologies

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

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

Diversification Opportunities for Allient and Uber Technologies

0.23

Correlation Coefficient

Allient  Uber Technologies

Modest diversification

The 3 months correlation between Allient and Uber is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Allient i.e., Allient and Uber Technologies go up and down completely randomly.

Pair Corralation between Allient and Uber Technologies

Given the investment horizon of 90 days Allient is expected to generate 3.54 times less return on investment than Uber Technologies. In addition to that, Allient is 1.11 times more volatile than Uber Technologies. It trades about 0.03 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.13 per unit of volatility. If you would invest  6,073  in Uber Technologies on December 20, 2024 and sell it today you would earn a total of  1,229  from holding Uber Technologies or generate 20.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Allient  vs.  Uber Technologies

Allient

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 2 (%) 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.

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Uber Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Uber Technologies

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

The idea behind Allient and Uber Technologies 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.