Correlation Between Genfit and Alliance Entertainment

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

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

Diversification Opportunities for Genfit and Alliance Entertainment

-0.34

Correlation Coefficient

Genfit  Alliance Entertainment

Very good diversification

The 3 months correlation between Genfit and Alliance is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Genfit and Alliance Entertainment Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Entertainment and Genfit 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 Genfit are associated (or correlated) with Alliance Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Entertainment has no effect on the direction of Genfit i.e., Genfit and Alliance Entertainment go up and down completely randomly.

Pair Corralation between Genfit and Alliance Entertainment

Given the investment horizon of 90 days Genfit is expected to under-perform the Alliance Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Genfit is 2.22 times less risky than Alliance Entertainment. The stock trades about 0.0 of its potential returns per unit of risk. The Alliance Entertainment Holding is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  187.00  in Alliance Entertainment Holding on September 13, 2024 and sell it today you would earn a total of  466.00  from holding Alliance Entertainment Holding or generate 249.2% return on investment over 90 days.

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

Genfit  vs.  Alliance Entertainment Holding

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alliance Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Entertainment Holding are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Alliance Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genfit and Alliance Entertainment

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

The idea behind Genfit and Alliance Entertainment Holding 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.