Correlation Between Alliance Recovery and International Consolidated

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

By analyzing existing cross correlation between Alliance Recovery and International Consolidated Companies, you can compare the effects of market volatilities on Alliance Recovery and International Consolidated 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 Alliance Recovery with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Recovery and International Consolidated.

Diversification Opportunities for Alliance Recovery and International Consolidated

0.32

Correlation Coefficient

Alliance Recovery  International Consolidated

Weak diversification

The 3 months correlation between Alliance and International is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Recovery and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Alliance Recovery 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 Alliance Recovery are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Alliance Recovery i.e., Alliance Recovery and International Consolidated go up and down completely randomly.

Pair Corralation between Alliance Recovery and International Consolidated

Given the investment horizon of 90 days Alliance Recovery is expected to under-perform the International Consolidated. But the pink sheet apears to be less risky and, when comparing its historical volatility, Alliance Recovery is 38.47 times less risky than International Consolidated. The pink sheet trades about -0.02 of its potential returns per unit of risk. The International Consolidated Companies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  40.00  in International Consolidated Companies on October 9, 2024 and sell it today you would lose (37.50) from holding International Consolidated Companies or give up 93.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Alliance Recovery  vs.  International Consolidated Com

Alliance Recovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Recovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

International Consolidated

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Recovery and International Consolidated

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

The idea behind Alliance Recovery and International Consolidated Companies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.