Correlation Between Alan Allman and Les Docks

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

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

Diversification Opportunities for Alan Allman and Les Docks

-0.74

Correlation Coefficient

Alan Allman  Les Docks

Pay attention - limited upside

The 3 months correlation between Alan and Les is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alan Allman Associates and Les Docks des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Docks des and Alan Allman 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 Alan Allman Associates are associated (or correlated) with Les Docks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Docks des has no effect on the direction of Alan Allman i.e., Alan Allman and Les Docks go up and down completely randomly.

Pair Corralation between Alan Allman and Les Docks

Assuming the 90 days trading horizon Alan Allman is expected to generate 12.29 times less return on investment than Les Docks. In addition to that, Alan Allman is 1.22 times more volatile than Les Docks des. It trades about 0.0 of its total potential returns per unit of risk. Les Docks des is currently generating about 0.05 per unit of volatility. If you would invest  43,613  in Les Docks des on February 14, 2024 and sell it today you would earn a total of  11,387  from holding Les Docks des or generate 26.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.97%
Values	Daily Returns

Alan Allman Associates  vs.  Les Docks des

Alan Allman Associates

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alan Allman Associates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Les Docks des

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Les Docks des are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Les Docks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Alan Allman and Les Docks

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

The idea behind Alan Allman Associates and Les Docks des 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 Stocks Directory module to find actively traded stocks across global markets.