Correlation Between Allient and Viemed Healthcare

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

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

Diversification Opportunities for Allient and Viemed Healthcare

-0.47

Correlation Coefficient

Allient  Viemed Healthcare

Very good diversification

The 3 months correlation between Allient and Viemed is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of Allient i.e., Allient and Viemed Healthcare go up and down completely randomly.

Pair Corralation between Allient and Viemed Healthcare

Given the investment horizon of 90 days Allient is expected to generate 1.78 times more return on investment than Viemed Healthcare. However, Allient is 1.78 times more volatile than Viemed Healthcare. It trades about 0.16 of its potential returns per unit of risk. Viemed Healthcare is currently generating about 0.06 per unit of risk. If you would invest  2,402  in Allient on October 25, 2024 and sell it today you would earn a total of  186.00  from holding Allient or generate 7.74% return on investment over 90 days.

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

Allient  vs.  Viemed Healthcare

Allient

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Allient and Viemed Healthcare

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

The idea behind Allient and Viemed Healthcare 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.