Correlation Between Alliance Select and ATN Holdings

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

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

Diversification Opportunities for Alliance Select and ATN Holdings

0.05

Correlation Coefficient

Alliance Select  ATN Holdings

Significant diversification

The 3 months correlation between Alliance and ATN is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods and ATN Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATN Holdings and Alliance Select 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 Select Foods are associated (or correlated) with ATN Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATN Holdings has no effect on the direction of Alliance Select i.e., Alliance Select and ATN Holdings go up and down completely randomly.

Pair Corralation between Alliance Select and ATN Holdings

Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 4.78 times more return on investment than ATN Holdings. However, Alliance Select is 4.78 times more volatile than ATN Holdings. It trades about 0.15 of its potential returns per unit of risk. ATN Holdings is currently generating about 0.05 per unit of risk. If you would invest  40.00  in Alliance Select Foods on December 30, 2024 and sell it today you would earn a total of  10.00  from holding Alliance Select Foods or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.62%
Values	Daily Returns

Alliance Select Foods  vs.  ATN Holdings

Alliance Select Foods

Risk-Adjusted Performance

Good

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

ATN Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ATN Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ATN Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alliance Select and ATN Holdings

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

The idea behind Alliance Select Foods and ATN Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.