Correlation Between Hesai Group and Allego

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

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

Diversification Opportunities for Hesai Group and Allego

0.45

Correlation Coefficient

Hesai Group  Allego

Very weak diversification

The 3 months correlation between Hesai and Allego is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hesai Group American and Allego Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allego Inc and Hesai Group 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 Hesai Group American are associated (or correlated) with Allego. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allego Inc has no effect on the direction of Hesai Group i.e., Hesai Group and Allego go up and down completely randomly.

Pair Corralation between Hesai Group and Allego

Given the investment horizon of 90 days Hesai Group American is expected to generate 0.49 times more return on investment than Allego. However, Hesai Group American is 2.04 times less risky than Allego. It trades about 0.18 of its potential returns per unit of risk. Allego Inc is currently generating about 0.03 per unit of risk. If you would invest  388.00  in Hesai Group American on August 31, 2024 and sell it today you would earn a total of  347.00  from holding Hesai Group American or generate 89.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.49%
Values	Daily Returns

Hesai Group American  vs.  Allego Inc

Hesai Group American

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hesai Group American are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Hesai Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Allego Inc

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Allego Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak essential indicators, Allego reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hesai Group and Allego

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

The idea behind Hesai Group American and Allego Inc 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.