Correlation Between Alliance Fiber and Applied Opt

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

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

Diversification Opportunities for Alliance Fiber and Applied Opt

0.0

Correlation Coefficient

Alliance Fiber  Applied Opt

Pay attention - limited upside

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

Pair Corralation between Alliance Fiber and Applied Opt

If you would invest (100.00) in Alliance Fiber Optic on January 26, 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	0.0%
Values	Daily Returns

Alliance Fiber Optic  vs.  Applied Opt

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.

Applied Opt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Opt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Alliance Fiber and Applied Opt

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

The idea behind Alliance Fiber Optic and Applied Opt 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.