Correlation Between Vita Coco and Allient

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

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

Diversification Opportunities for Vita Coco and Allient

0.89

Correlation Coefficient

Vita Coco  Allient

Very poor diversification

The 3 months correlation between Vita and Allient is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Allient go up and down completely randomly.

Pair Corralation between Vita Coco and Allient

Given the investment horizon of 90 days Vita Coco is expected to generate 0.77 times more return on investment than Allient. However, Vita Coco is 1.3 times less risky than Allient. It trades about 0.1 of its potential returns per unit of risk. Allient is currently generating about 0.01 per unit of risk. If you would invest  2,787  in Vita Coco on September 29, 2024 and sell it today you would earn a total of  847.00  from holding Vita Coco or generate 30.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Vita Coco  vs.  Allient

Vita Coco

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Allient

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vita Coco and Allient

The main advantage of trading using opposite Vita Coco and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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 Vita Coco 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.