Correlation Between NN and Alliance Global

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

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

Diversification Opportunities for NN and Alliance Global

0.43

Correlation Coefficient

NN  Alliance Global

Very weak diversification

The 3 months correlation between NN and Alliance is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc 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 NN 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 NN Inc 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 NN i.e., NN and Alliance Global go up and down completely randomly.

Pair Corralation between NN and Alliance Global

Given the investment horizon of 90 days NN Inc is expected to under-perform the Alliance Global. But the stock apears to be less risky and, when comparing its historical volatility, NN Inc is 1.04 times less risky than Alliance Global. The stock trades about -0.1 of its potential returns per unit of risk. The Alliance Global Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  763.00  in Alliance Global Group on December 28, 2024 and sell it today you would lose (196.00) from holding Alliance Global Group or give up 25.69% of portfolio value over 90 days.

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

NN Inc  vs.  Alliance Global Group

NN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 NN and Alliance Global

The main advantage of trading using opposite NN and Alliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN 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 NN Inc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.