Correlation Between Soditech and Alan Allman

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

By analyzing existing cross correlation between Soditech SA and Alan Allman Associates, you can compare the effects of market volatilities on Soditech and Alan Allman 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 Soditech with a short position of Alan Allman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Alan Allman.

Diversification Opportunities for Soditech and Alan Allman

-0.01

Correlation Coefficient

Soditech  Alan Allman

Good diversification

The 3 months correlation between Soditech and Alan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Alan Allman Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alan Allman Associates and Soditech 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 Soditech SA are associated (or correlated) with Alan Allman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alan Allman Associates has no effect on the direction of Soditech i.e., Soditech and Alan Allman go up and down completely randomly.

Pair Corralation between Soditech and Alan Allman

Assuming the 90 days trading horizon Soditech is expected to generate 103.5 times less return on investment than Alan Allman. But when comparing it to its historical volatility, Soditech SA is 1.93 times less risky than Alan Allman. It trades about 0.01 of its potential returns per unit of risk. Alan Allman Associates is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  346.00  in Alan Allman Associates on October 11, 2024 and sell it today you would earn a total of  414.00  from holding Alan Allman Associates or generate 119.65% return on investment over 90 days.

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

Soditech SA  vs.  Alan Allman Associates

Soditech SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soditech SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Soditech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alan Allman Associates

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alan Allman Associates are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alan Allman sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Soditech and Alan Allman

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

The idea behind Soditech SA and Alan Allman Associates 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.