Correlation Between Actions Semiconductor and Alliance Fiber

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

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

Diversification Opportunities for Actions Semiconductor and Alliance Fiber

0.0

Correlation Coefficient

Actions Semiconductor  Alliance Fiber

Pay attention - limited upside

The 3 months correlation between Actions and Alliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Actions Semiconductor and Alliance Fiber Optic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Fiber Optic and Actions Semiconductor 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 Actions Semiconductor are associated (or correlated) with Alliance Fiber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Fiber Optic has no effect on the direction of Actions Semiconductor i.e., Actions Semiconductor and Alliance Fiber go up and down completely randomly.

Pair Corralation between Actions Semiconductor and Alliance Fiber

If you would invest (100.00) in Alliance Fiber Optic on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Alliance Fiber Optic or generate -100.0% return on investment over 90 days.

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

Actions Semiconductor  vs.  Alliance Fiber Optic

Actions Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Actions Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Actions Semiconductor is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Alliance Fiber Optic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliance Fiber Optic has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Alliance Fiber is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Actions Semiconductor and Alliance Fiber

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

The idea behind Actions Semiconductor and Alliance Fiber Optic 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.