Correlation Between BLZ and ALG

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

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

Diversification Opportunities for BLZ and ALG

0.0

Correlation Coefficient

BLZ  ALG

Pay attention - limited upside

The 3 months correlation between BLZ and ALG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BLZ and ALG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALG and BLZ 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 BLZ are associated (or correlated) with ALG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALG has no effect on the direction of BLZ i.e., BLZ and ALG go up and down completely randomly.

Pair Corralation between BLZ and ALG

If you would invest  5.40  in BLZ on December 28, 2024 and sell it today you would lose (1.95) from holding BLZ or give up 36.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BLZ  vs.  ALG

BLZ

Risk-Adjusted Performance

Very Weak

Over the last 90 days BLZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BLZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ALG

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ALG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BLZ and ALG

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

The idea behind BLZ and ALG 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.