Correlation Between Allient and Meiwu Technology

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

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

Diversification Opportunities for Allient and Meiwu Technology

0.65

Correlation Coefficient

Allient  Meiwu Technology

Poor diversification

The 3 months correlation between Allient and Meiwu is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Meiwu Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiwu Technology 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 Meiwu Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiwu Technology has no effect on the direction of Allient i.e., Allient and Meiwu Technology go up and down completely randomly.

Pair Corralation between Allient and Meiwu Technology

Given the investment horizon of 90 days Allient is expected to under-perform the Meiwu Technology. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 2.9 times less risky than Meiwu Technology. The stock trades about 0.0 of its potential returns per unit of risk. The Meiwu Technology Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  770.00  in Meiwu Technology Co on September 13, 2024 and sell it today you would lose (640.00) from holding Meiwu Technology Co or give up 83.12% of portfolio value over 90 days.

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

Allient  vs.  Meiwu Technology Co

Allient

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 14 (%) 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.

Meiwu Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Meiwu Technology Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Meiwu Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allient and Meiwu Technology

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

The idea behind Allient and Meiwu Technology Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.