Correlation Between Arteris and Alliance Fiber

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

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

Diversification Opportunities for Arteris and Alliance Fiber

0.0

Correlation Coefficient

Arteris  Alliance Fiber

Pay attention - limited upside

The 3 months correlation between Arteris and Alliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arteris 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 Arteris 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 Arteris 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 Arteris i.e., Arteris and Alliance Fiber go up and down completely randomly.

Pair Corralation between Arteris and Alliance Fiber

If you would invest  659.00  in Arteris on January 24, 2024 and sell it today you would lose (9.00) from holding Arteris or give up 1.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arteris  vs.  Alliance Fiber Optic

Arteris

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arteris are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Arteris may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 Arteris and Alliance Fiber

The main advantage of trading using opposite Arteris and Alliance Fiber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arteris 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 Arteris 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.