Correlation Between Liberty Flour and Alliance Select

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

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

Diversification Opportunities for Liberty Flour and Alliance Select

0.06

Correlation Coefficient

Liberty Flour  Alliance Select

Significant diversification

The 3 months correlation between Liberty and Alliance is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Flour Mills and Alliance Select Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Select Foods and Liberty Flour 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 Liberty Flour Mills are associated (or correlated) with Alliance Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Select Foods has no effect on the direction of Liberty Flour i.e., Liberty Flour and Alliance Select go up and down completely randomly.

Pair Corralation between Liberty Flour and Alliance Select

Assuming the 90 days trading horizon Liberty Flour Mills is expected to generate 1.47 times more return on investment than Alliance Select. However, Liberty Flour is 1.47 times more volatile than Alliance Select Foods. It trades about 0.07 of its potential returns per unit of risk. Alliance Select Foods is currently generating about 0.01 per unit of risk. If you would invest  1,139  in Liberty Flour Mills on April 1, 2025 and sell it today you would earn a total of  1,236  from holding Liberty Flour Mills or generate 108.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.72%
Values	Daily Returns

Liberty Flour Mills  vs.  Alliance Select Foods

Liberty Flour Mills

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Flour Mills are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Liberty Flour exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alliance Select Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Select Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Liberty Flour and Alliance Select

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

The idea behind Liberty Flour Mills and Alliance Select Foods 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.