Correlation Between Allient and Valens

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

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

Diversification Opportunities for Allient and Valens

0.33

Correlation Coefficient

Allient  Valens

Weak diversification

The 3 months correlation between Allient and Valens is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of Allient i.e., Allient and Valens go up and down completely randomly.

Pair Corralation between Allient and Valens

Given the investment horizon of 90 days Allient is expected to generate 5.51 times less return on investment than Valens. But when comparing it to its historical volatility, Allient is 1.81 times less risky than Valens. It trades about 0.02 of its potential returns per unit of risk. Valens is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  192.00  in Valens on December 22, 2024 and sell it today you would earn a total of  23.00  from holding Valens or generate 11.98% 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.  Valens

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.

Valens

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Valens

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

The idea behind Allient and Valens 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.