Correlation Between Blue Moon and Allient

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

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

Diversification Opportunities for Blue Moon and Allient

0.31

Correlation Coefficient

Blue Moon  Allient

Weak diversification

The 3 months correlation between Blue and Allient is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Blue Moon i.e., Blue Moon and Allient go up and down completely randomly.

Pair Corralation between Blue Moon and Allient

Assuming the 90 days horizon Blue Moon is expected to generate 21.28 times less return on investment than Allient. But when comparing it to its historical volatility, Blue Moon Metals is 1.02 times less risky than Allient. It trades about 0.01 of its potential returns per unit of risk. Allient is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  2,046  in Allient on October 7, 2024 and sell it today you would earn a total of  515.00  from holding Allient or generate 25.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Blue Moon Metals  vs.  Allient

Blue Moon Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Allient

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blue Moon and Allient

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

The idea behind Blue Moon Metals and Allient 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.