Correlation Between Alight and Oneconnect Financial

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

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

Diversification Opportunities for Alight and Oneconnect Financial

0.11

Correlation Coefficient

Alight  Oneconnect Financial

Average diversification

The 3 months correlation between Alight and Oneconnect is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alight Inc and Oneconnect Financial Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oneconnect Financial and Alight 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 Alight Inc are associated (or correlated) with Oneconnect Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oneconnect Financial has no effect on the direction of Alight i.e., Alight and Oneconnect Financial go up and down completely randomly.

Pair Corralation between Alight and Oneconnect Financial

Given the investment horizon of 90 days Alight Inc is expected to under-perform the Oneconnect Financial. But the stock apears to be less risky and, when comparing its historical volatility, Alight Inc is 1.03 times less risky than Oneconnect Financial. The stock trades about -0.2 of its potential returns per unit of risk. The Oneconnect Financial Technology is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Oneconnect Financial Technology on March 5, 2024 and sell it today you would lose (32.00) from holding Oneconnect Financial Technology or give up 14.1% of portfolio value over 90 days.

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

Alight Inc  vs.  Oneconnect Financial Technolog

Alight Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alight Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Oneconnect Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oneconnect Financial Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alight and Oneconnect Financial

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

The idea behind Alight Inc and Oneconnect Financial Technology 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.