Correlation Between Identiv and ALM ES

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

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

Diversification Opportunities for Identiv and ALM ES

0.86

Correlation Coefficient

Identiv  ALM ES

Very poor diversification

The 3 months correlation between Identiv and ALM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and ALM ES Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALM ES Actions and Identiv 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 Identiv are associated (or correlated) with ALM ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALM ES Actions has no effect on the direction of Identiv i.e., Identiv and ALM ES go up and down completely randomly.

Pair Corralation between Identiv and ALM ES

Assuming the 90 days trading horizon Identiv is expected to under-perform the ALM ES. In addition to that, Identiv is 5.24 times more volatile than ALM ES Actions. It trades about -0.08 of its total potential returns per unit of risk. ALM ES Actions is currently generating about -0.24 per unit of volatility. If you would invest  13,051  in ALM ES Actions on October 9, 2024 and sell it today you would lose (268.00) from holding ALM ES Actions or give up 2.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.12%
Values	Daily Returns

Identiv  vs.  ALM ES Actions

Identiv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

ALM ES Actions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ALM ES Actions are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, ALM ES is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Identiv and ALM ES

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

The idea behind Identiv and ALM ES Actions 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.