Correlation Between AALLN and Socket Mobile

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

By analyzing existing cross correlation between AALLN 225 17 MAR 28 and Socket Mobile, you can compare the effects of market volatilities on AALLN and Socket Mobile 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 AALLN with a short position of Socket Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of AALLN and Socket Mobile.

Diversification Opportunities for AALLN and Socket Mobile

0.38

Correlation Coefficient

AALLN  Socket Mobile

Weak diversification

The 3 months correlation between AALLN and Socket is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding AALLN 225 17 MAR 28 and Socket Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Socket Mobile and AALLN 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 AALLN 225 17 MAR 28 are associated (or correlated) with Socket Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Socket Mobile has no effect on the direction of AALLN i.e., AALLN and Socket Mobile go up and down completely randomly.

Pair Corralation between AALLN and Socket Mobile

Assuming the 90 days trading horizon AALLN 225 17 MAR 28 is expected to under-perform the Socket Mobile. But the bond apears to be less risky and, when comparing its historical volatility, AALLN 225 17 MAR 28 is 12.34 times less risky than Socket Mobile. The bond trades about -0.07 of its potential returns per unit of risk. The Socket Mobile is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Socket Mobile on September 13, 2024 and sell it today you would earn a total of  28.00  from holding Socket Mobile or generate 23.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

AALLN 225 17 MAR 28  vs.  Socket Mobile

AALLN 225 17

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AALLN 225 17 MAR 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AALLN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Socket Mobile

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Socket Mobile are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Socket Mobile unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AALLN and Socket Mobile

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

The idea behind AALLN 225 17 MAR 28 and Socket Mobile 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.