Correlation Between World Oil and Alliance Global

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

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

Diversification Opportunities for World Oil and Alliance Global

0.85

Correlation Coefficient

World Oil  Alliance Global

Very poor diversification

The 3 months correlation between World and Alliance is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding World Oil Group and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and World Oil 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 World Oil Group are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of World Oil i.e., World Oil and Alliance Global go up and down completely randomly.

Pair Corralation between World Oil and Alliance Global

Given the investment horizon of 90 days World Oil Group is expected to under-perform the Alliance Global. In addition to that, World Oil is 1.7 times more volatile than Alliance Global Group. It trades about -0.17 of its total potential returns per unit of risk. Alliance Global Group is currently generating about -0.11 per unit of volatility. If you would invest  763.00  in Alliance Global Group on December 29, 2024 and sell it today you would lose (241.00) from holding Alliance Global Group or give up 31.59% of portfolio value over 90 days.

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

World Oil Group  vs.  Alliance Global Group

World Oil Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days World Oil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Alliance Global Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Global Group 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with World Oil and Alliance Global

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

The idea behind World Oil Group and Alliance Global Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.