Correlation Between Applied Blockchain and Allison

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

By analyzing existing cross correlation between Applied Blockchain and Allison Transmission 475, you can compare the effects of market volatilities on Applied Blockchain and Allison 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 Applied Blockchain with a short position of Allison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and Allison.

Diversification Opportunities for Applied Blockchain and Allison

-0.28

Correlation Coefficient

Applied Blockchain  Allison

Very good diversification

The 3 months correlation between Applied and Allison is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and Allison Transmission 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allison Transmission 475 and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with Allison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allison Transmission 475 has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and Allison go up and down completely randomly.

Pair Corralation between Applied Blockchain and Allison

Given the investment horizon of 90 days Applied Blockchain is expected to under-perform the Allison. In addition to that, Applied Blockchain is 15.67 times more volatile than Allison Transmission 475. It trades about -0.02 of its total potential returns per unit of risk. Allison Transmission 475 is currently generating about 0.13 per unit of volatility. If you would invest  9,782  in Allison Transmission 475 on September 21, 2024 and sell it today you would earn a total of  93.00  from holding Allison Transmission 475 or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Applied Blockchain  vs.  Allison Transmission 475

Applied Blockchain

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Allison Transmission 475

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allison Transmission 475 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Allison is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Blockchain and Allison

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

The idea behind Applied Blockchain and Allison Transmission 475 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.