Correlation Between FormFactor and Allient

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

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

Diversification Opportunities for FormFactor and Allient

0.33

Correlation Coefficient

FormFactor  Allient

Weak diversification

The 3 months correlation between FormFactor and Allient is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and FormFactor 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 FormFactor 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 FormFactor i.e., FormFactor and Allient go up and down completely randomly.

Pair Corralation between FormFactor and Allient

Given the investment horizon of 90 days FormFactor is expected to under-perform the Allient. In addition to that, FormFactor is 1.02 times more volatile than Allient. It trades about -0.23 of its total potential returns per unit of risk. Allient is currently generating about -0.02 per unit of volatility. If you would invest  2,398  in Allient on December 30, 2024 and sell it today you would lose (149.00) from holding Allient or give up 6.21% of portfolio value over 90 days.

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

FormFactor  vs.  Allient

FormFactor

Risk-Adjusted Performance

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Allient

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Allient is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FormFactor and Allient

The main advantage of trading using opposite FormFactor and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FormFactor 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 FormFactor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.