Correlation Between Allied Motion and American Aires

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

By analyzing existing cross correlation between Allied Motion Technologies and American Aires, you can compare the effects of market volatilities on Allied Motion and American Aires 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 Allied Motion with a short position of American Aires. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Motion and American Aires.

Diversification Opportunities for Allied Motion and American Aires

-0.74

Correlation Coefficient

Allied Motion  American Aires

Pay attention - limited upside

The 3 months correlation between Allied and American is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Allied Motion Technologies and American Aires in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Aires and Allied Motion 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 Allied Motion Technologies are associated (or correlated) with American Aires. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Aires has no effect on the direction of Allied Motion i.e., Allied Motion and American Aires go up and down completely randomly.

Pair Corralation between Allied Motion and American Aires

If you would invest  3,917  in Allied Motion Technologies on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Allied Motion Technologies or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Allied Motion Technologies  vs.  American Aires

Allied Motion Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allied Motion Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allied Motion is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

American Aires

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Aires has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Allied Motion and American Aires

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

The idea behind Allied Motion Technologies and American Aires 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 Commodity Directory module to find actively traded commodities issued by global exchanges.